Reconciliation & Position

The Daily Position Report is the primary tool used by the Client's Operations and Accounting teams to track and reconcile the "send" and "receive" sides of a reciprocal relationship. It ensures that the Client can check that the net activity for the day results in the correct settlement amount.

Daily Position Report

This report is designed to show two sides of the DDM Program relationship. For a 100% reciprocal Client, the "Money Movement" should align across both categories.

Visual Reference: Daily Position Report (Sample Report Data)

DAILY POSITION REPORT                                AS RECEIVING BANK    AS SENDING BANK    MONEY MOVEMENT
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DDM Reciprocal-Side Beginning Principal Balance:      $15,302,307.15
Reciprocal-Side Daily Net Activity:                      $128,973.17                         $128,973.17 Daily Activity: Reciprocal Deposit into Account
DDM Reciprocal-Side Ending Principal Balance:         $15,431,280.32
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Daily Customer Interest Accrual (Total):                     $691.98
Daily Cust Int Accrual (Your Bank Expense):                  $639.27
Daily DDM Fee Accrual:                                       $692.47
Daily Contractual Interest Accrual:                        $1,331.74  <-- (Bank Expense + Fee Accrual)
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Send-Side Beginning Principal Balance:                                     $15,302,307.15
Send-Side Daily Net Activity:                                                 $128,973.17   ($128,973.17) Daily Activity: Deposit into DDM Program
Send-Side Ending Principal Balance:                                        $15,431,280.32
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2022-09-29 SETTLEMENT AMOUNT:                                                                $0.00                                                               $0.00

As Receiving Institution (The "Inbound" Side)

This section tracks the DDM Reciprocal-Side Deposit Account, representing funds received from the network.

Beginning Principal Balance: The balance at the start of the business day in the Program Account at the Receiving Institution.
Reciprocal-Side Daily Net Activity: The total change in balance for the day. A positive number indicated a Reciprocal Deposit into the Account.
Interest & Accruals: Includes Daily and Month-to-Date (MTD) figures for Customer Interest Accrual, DDM Fee Accrual, and TACF (Contractual) Rate Accrual and figures for Receive-Side Customer Interest Accrual.
TACF (Contractual) Rate Accrual: Calculated as Daily Customer Interest Accrual (Client's Expense) plus Daily Fee Accrual.
Daily Contractual Interest Accrual: Represents the TACF Rate Accrual amount.
Daily DDM Fee Accrual: Represents the daily Receiving Institution Fee Accrual reported in the Daily Position Report.

As Sending Institution (The "Outbound" Side)

This section tracks the client's customer deposits that have been sent into the DDM Program.

Send-Side Beginning Principal Balance: The client's customer's total starting balance in the program.
Send-Side Daily Net Activity: If this is a negative number (shown in red), it indicates a Withdrawal from the DDM Program.
Ending Principal Balance: The final amount placed in the program for the client's customers at end-of-day.

Money Movement (Interpreting Activity)

The Money Movement column serves as the "shorthand" interpretation of the relationship between the Receiving and Sending sides. It provides system-generated labels that explain the daily change in principal.

"Daily Activity: Reciprocal Deposit into Account": This indicates a net increase on the Receiving side. The network has placed funds at the client to match their customer participation.
"Daily Activity: Deposit into DDM Program": This indicates a net increase on the Sending side. The client has placed customer funds into the DDM network.
Values in Red/Parenthesis: These indicate a Withdrawal or a net decrease in principal for that specific side.

Settlement Finalization: Key Reconciliation Point

At the bottom of the report, the Settlement Amount should be the net result of the daily activity.

Goal: In a 100% reciprocal relationship, the activity on the Receive side and the Send side will offset, ideally resulting in a $0.00 Settlement Amount.
Action: If the Settlement Amount is not zero, this figure informs the Net Wire Transfer Instructions that must be executed.

Month-End Position Report

The Month-End Position Report provides the suggested entries to settle month-end interest and fees. The report is divided into the following sections:

Reciprocal-Side Deposit Account Reconciliation

This section reconciles the beginning-of-day balance of the Reciprocal-Side Deposit Account to the end-of-day balance on the last business day of the month, including the impact of daily activity and the posting of accrued interest.

Action Required: Note ‘MONTH-END ENTRY #1”, “Credit Reciprocal-Side Deposit Account, Debit Interest Expense”. This represents the credit to the Reciprocal-Side Deposit Account for the interest owed on this deposit balance.

Visual Reference: Reciprocal-Side Deposit Account (Sample Report Data)

RECIPROCAL-SIDE DEPOSIT ACCOUNT RECONCILIATION                AS RECEIVING BANK         AS SENDING BANK            MONEY MOVEMENT
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DDM Reciprocal-Side Deposit Account Beginning Principal 
Balance:                                                          $18,742,525.17

Reciprocal-Side Daily Net Activity:                               $355,224.14                                      $355,224.14   Daily Activity: Reciprocal Deposit into Account

Total MTD Reciprocal-Side Customer Interest Accrued:               $8,175.27                                      MONTH-END ENTRY #1: Credit Reciprocal-Side Deposit Account; Debit Interest Expense

DDM Reciprocal Deposit Account Ending Principal 
Balance:                                                          $19,105,924.58

Month-to-Date Reciprocal-Side Customer Interest

This section breaks down the TACF (Contractual) Rate including:

the Customer Interest Accrual on the Receive-Side Deposit Account;
any amount equal to the Supplemental Interest owed; and
the amount of Receive-Side fees.

Visual Reference: Month-to-Date Reciprocal-Side Customer Interest (Sample Report Data)

MONTH-TO-DATE RECIPROCAL-SIDE CUSTOMER INTEREST               AS RECEIVING BANK        AS SENDING BANK        MONEY MOVEMENT
------------------------------------------------------------------------------------------------------------------------------------
Total MTD Reciprocal-Side Customer Interest Accrued:              $8,175.27

    Your Bank's Share of MTD Reciprocal-Side Cust Int 
    Accrued (A):                                                  $7,887.37

    Other DDM Banks Share of MTD Reciprocal-Side 
    Cust Int Accrued (Shortfall Receivable):                        $287.90

MTD DDM Reciprocal-Side Fee Accrual (B):                          $6,388.39

MTD Reciprocal-Side Contractual Expense (A) + (B):               $14,275.76
    (Month-end Reciprocal-Side Contractual Rate: 1.340000%)

Send-Side Balance Reconciliation

This section reconciles the beginning-of-day balance of the total amount of the Client's customers placed into the DDM Program to the end-of-day balance on the last business day of the month, including the impact of daily activity and the posting of accrued interest earned by Customers. Further, it breaks down:

the amount of Customer Interest paid by Receiving Institutions under the DDM Program;
the amount of any Supplemental Interest owed by the Client to other Participating Institutions in the DDM Program (typically based on the excess, if any, of the amount paid to Customers over the DDM Program Rate);
any pre-paid interest receivable associated with Customers that fully withdrew their deposit balance during the month; and
the Client's daily deposit or withdrawal activity.

Visual Reference: Send-Side Balance Reconciliation (Sample Report Data)

SEND-SIDE BALANCE RECONCILIATION                              AS RECEIVING BANK        AS SENDING BANK          MONEY MOVEMENT
-------------------------------------------------------------------------------------------------------------------------------------------
Send-Side Beginning Principal Balance:                                                        $18,742,525.17

Send-Side Daily Net Activity:                                                                  $355,224.14        ($355,224.14)   Daily Activity: Deposit into DDM Program

Total MTD Send-Side Customer Interest Accrued:                                                 $3,682.20

    Your MTD Send-Side Cust Int Accrued (Shortfall Payable):                                  $0.00

    All Other Receiving Banks Share of MTD Send-Side 
    Cust Int Accrued:                                                                          $3,682.20

Pre-Paid Send-Side Interest Receivable:                                                        $0.00

Send-Side Ending Principal Balance:                                                            $19,101,431.51

2022-06-30   Settlement Amount:                                                                                       $0.00                -

Month-End Shortfall

In this section, the Supplemental Interest payable by the Client is netted with any Receive-Side and any pre-paid interest receivable.

Action Required: Note “MONTH-END ENTRY #2: Debit DDM Receive-Side Deposit Account ($287.90), Credit Interest Expense”. It is important to note that this example represents a net Supplemental Interest “receivable”. In the event of a net Supplemental Interest “payable”, the suggested “MONTH-END ENTRY #2” would be to credit the Receive-Side Deposit Account and debit Interest Expense.

Visual Reference: Month-End Shortfall (Sample Data)

MONTH-END SHORTFALL                                               AS RECEIVING BANK        AS SENDING BANK        MONEY MOVEMENT
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Month-end Interest Shortfall Summary:

    Other DDM Banks Share of MTD Reciprocal-Side Cust Int 
    Accrued (Shortfall Receivable):                                  $287.90

    Pre-Paid Send-Side Interest Receivable:                           $0.00

    Your MTD Send-Side Cust Int Accrued (Shortfall Payable):          $0.00

Net Interest Shortfall:                                             ($287.90)                                   MONTH-END ENTRY #2: Debit DDM Reciprocal-Side Deposit Account; Credit Interest Expense

Month-End Net Interest Wire

In this section, the Client's share of reciprocal-side MTD customer interest is netted against the other receiving institutions’ share of the MTD send-side customer interest accrual. As demonstrated in the below examples, it is important to pay attention to the instructions because the net wire may need to either be wired by the Client; or paid by the DDM Program to the Client (i.e., into the Reciprocal-Side Deposit Account).

Example 1: Net Payable to the Client

There is a net payable to "YOUR INSTITUTION".

Action Required: Note “1st BUSINESS DAY WIRE #1: DDM to wire to the Client's Receive-Side Deposit Account” ($7,517.01) and “1st BUSINESS DAY ENTRY #1: Credit DDM Receive-Side Deposit Account, Debit Cash”.

Visual Reference: Net Payable to the Client (Sample Report Data)

MONTH-END NET INTEREST WIRE                                    AS RECEIVING BANK        AS SENDING BANK        MONEY MOVEMENT
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Your Reciprocal-Side Share of MTD Cust Int Paid:                   $23,660.23

All Other Receiving Banks Share of MTD Send-Side 
Cust Int Accrued:                                                  $31,177.24

INTEREST SETTLEMENT – Next Business Day:                          ($7,517.01)              $7,517.01            1st BUSINESS DAY WIRE #1: DDM to wire to bank Reciprocal-Side Deposit Account.
                                                                                                                1st BUSINESS DAY ENTRY #1: Credit DDM Reciprocal-Side Deposit Account; Debit Cash.

Example 2: Net Payable to DDM Program

There is a net payable due by the Client to the "DDM PROGRAM".

IMPORTANT

In the event that the Net Fees per Section 6 is a negative number (Section 6, Example 2), then the report will instruct the Client to reduce the amount of its net interest settlement by the amount of such negative net fees. The 1st BUSINESS DAY ENTRY #1 would be adjusted as follows: Credit to Interest Expense for the absolute value of the negative net fee, Debit Cash for the same amount.

Visual Reference: Net Payable to DDM Program (Sample Report Data)

MONTH-END NET INTEREST WIRE                                    AS RECEIVING BANK        AS SENDING BANK        MONEY MOVEMENT
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Your Reciprocal-Side Share of MTD Cust Int Paid:                   $7,887.37

All Other Receiving Banks Share of MTD Send-Side 
Cust Int Accrued:                                                   $3,682.20

INTEREST SETTLEMENT – Next Business Day:                           $4,205.17               ($4,205.17)

Net Fees to DDM

This is comprised of two components:

the fee accrual due from the Receiving Institution for using the DDM Program; less
the fee income due to the Client on the Sending Institution side.

Example 1: Net Payable to DDM

The net fee is owed to the DDM Program and should be wired to the fee account at the fee settlement bank for the program, per the wire instructions shown on the report (and on the transfer instruction form you will receive).

Action Required: Follow the instruction “1st BUSINESS DAY WIRE #2: Institution to wire net fee to DDM” and “1st BUSINESS DAY ENTRY #2: Debit Interest Expense ($13,659.65), Credit Cash”.

Visual Reference: Net Fees to DDM - Net Payable to DDM (Sample Report Data)

NET FEES TO DDM                                                AS RECEIVING BANK        AS SENDING BANK        MONEY MOVEMENT
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Send-Side Fee Income Due to Bank:                                  ($23,113.70)

Reciprocal-Side Fee Payable Due to DDM:                             $36,773.35

NET FEE PAYABLE:                                                    $13,659.65

NET FEE PAYABLE – Next Business Day:                                $13,659.65           $13,659.65            1st BUSINESS DAY WIRE #2: Bank to wire net fee to DDM
                                                                                                                1st BUSINESS DAY ENTRY #2: Debit Interest Expense; Credit Cash

PLEASE REMIT DDM FEE TO:
      [Fee Settlement Bank Name]
      ABA# XXXXXXXX
      A/C# XXXXXXXX
      Name: Stable Custody Group II LLC
      REF: DDM Product Fee

Example 2: Net Payable to Client

The net fee payable is negative and therefore is due to the institution. The payable due to the institution is netted against the interest wire (as described in the note in section 5 above) to create one net movement.

Action Required: Follow the instruction “1st BUSINESS DAY WIRE #1: Institution to wire to DDM” as shown in the Net Payable & Interest Settlement Money Movement section. The Total Money Movement amount represents the net of the interest settlement to be debited from the Program Account and the payable to the institution from the DDM Program. “1st BUSINESS DAY ENTRY #1: Debit DDM Reciprocal-Side Deposit Account ($4,205.17), Credit Cash; THEN with respect to the Payable to the Client from DDM: Credit Interest Expense ($2,732.63), and Debit Cash for same amount.

Visual Reference: Net Fees to DDM - Net Payable to the Client (Sample Report Data)

NET FEES TO DDM                                                AS RECEIVING BANK        AS SENDING BANK        MONEY MOVEMENT
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Send-Side Fee Income Due to Bank:                                  ($9,121.02)

Reciprocal-Side Fee Payable Due to DDM:                              $6,388.39

NET PAYABLE TO BANK:                                               ($2,732.63)

NET PAYABLE & INTEREST SETTLEMENT MONEY MOVEMENT
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INTEREST SETTLEMENT – Next Business Day:                             $4,205.17                                 1st BUSINESS DAY ENTRY #1: Debit DDM Reciprocal-Side Deposit Account; Credit Cash.

NET PAYABLE TO BANK:                                                ($2,732.63)                                 Payable to the bank from DDM; Credit Interest Expense; Debit Cash.

Total Money Movement:                                                $1,472.54                                  1st BUSINESS DAY WIRE #1: Bank to wire to DDM.

Cost of Program Funds

Proof of the spread the institution has agreed to pay on the reciprocal deposits, e.g. 10 bps.

Action Required (Optional): Note the “Optional Month End Entry #3:
Debit operating expense, credit interest expense for the R&T Fee (commonly referred to as the Reciprocal Administration Fee), which can be made if the Client prefers to record the reciprocal fee as an operating expense.

This outlines the fee associated with participating in the DDM Program and equals the total money movement as shown above in section 6, example 2.

Visual Reference: Cost of Program Funds (Sample Report Data)

COST OF PROGRAM FUNDS                                      RECIPROCAL PORTION        EXCESS SEND PORTION        TOTAL
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Average Send-Side Balances (A)                                $17,916,015.86               $0.00              $17,916,015.86
Total MTD Send-Side Customer interest accrued                   $3,682.20                   $0.00                 $3,682.20

Reciprocal Administration Fee per DDM agreement (B)             $1,472.54                    NA                   $1,472.54
Net Monthly Expense:                                             $5,154.74                  $0.00                 $5,154.74

Reciprocal Administration Fee Rate (B) / (A) / # of days in
month × # of days in year × 0.1000%                             (value shown as formula on spreadsheet)

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Total MTD Send-Side Customer interest accrued                     $3,682.20
NET FEE PAYABLE – Next Business day                              ($2,732.63)
INTEREST SETTLEMENT – Next Business day                           $4,205.17               $5,154.74    (Agrees to net monthly expense above.)

Summary Reconciliation

This section displays the reciprocal-side deposit account end-of-day balance, the net supplemental interest (interest shortfall), and interest settlement wire to show the reconcilement to the send-side ending balance for a 100% reciprocal institution.

Visual Reference: Summary Reconciliation (Sample Report Data)

SUMMARY RECONCILIATION
DDM Reciprocal-Side Deposit Account EOD Balance:                       $19,105,924.58
    + Net Interest Shortfall:                                            ($287.90)
    + Interest Settlement Wire:                                        ($4,205.17)
= Send-Side EOD Balance:                                               $19,101,431.51