3.1 Fedwire Funds Service (US)

Fedwire is the US Federal Reserve’s Real-Time Gross Settlement (RTGS) system. It dates back to 1918, when the Federal Reserve inaugurated a network of wire communications among Reserve Banks .

Key Features

  • Owned and operated by the Federal Reserve

  • Approximately 6,000 direct participants

  • Settles time-critical payments on behalf of participants and their corporate customers

  • Operating hours: Extended hours with plans for further extensions

  • Real-time, final, and irrevocable settlement

Payment Types

  • Interbank transfers

  • Commercial transactions

  • Securities-related payments

  • Government payments

Legal Framework

  • Governed by Federal Reserve regulations

  • Finality of settlement is legally protected

  • Protected under U.S. bankruptcy laws

3.2 CHIPS (Clearing House Interbank Payment System)

CHIPS is a privately operated system that began operation in 1974 as a DNS system. In 2001, it moved to a “hybrid” settlement model that continuously matches and nets payments .

Key Features

  • Owned and operated by The Clearing House (a consortium of banks)

  • Approximately 45 direct participants

  • Settles large-value international and domestic payments

  • Hybrid model: Continuous matching and netting with final settlement

  • Lower liquidity requirements than RTGS

Payment Types

  • Commercial transactions

  • Bank loans

  • Securities transactions

  • Cross-border payments

Structural Differences from Europe

One key difference between US and European markets is the greater usage of “trade capture” in US clearing processes—aggregating trade data from multiple venues before submission to NSCC on a “locked-in” basis. This has proven valuable in a T+1 environment .

3.3 European Wholesale Systems

TARGET2 (Trans-European Automated Real-time Gross Settlement Express Transfer System)

  • Operated by the Eurosystem (ECB and national central banks)

  • Real-time gross settlement

  • Settles payments in euro

  • Used for monetary policy operations and interbank transfers

EURO1 (EBA Clearing)

  • Private system operated by EBA Clearing

  • Net settlement system

  • Used for high-value payments in euro

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