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Meaning of CHIPS

Discuss Meaning of CHIPS within the Accounts forums, part of the PUBLISH / UPLOAD PROJECT OR DOWNLOAD REFERENCE PROJECT category; CHIPS stands for clearing house interbank payment system . It is one of the largest private sector US dollar funds ...

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Bhautik Kawa
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Post Meaning of CHIPS - August 7th, 2013

CHIPS stands for clearing house interbank payment system. It is one of the largest private sector US dollar funds transfer system. It basically acts like a clearing house.

CHIPS is owned by financial institutions. According to the Federal Financial Institutions Examination Council (FFIEC), an interagency office of the United States government, "any banking organization with a regulated U.S. presence may become an owner and participate in the network." CHIPS participants may be commercial banks, Edge Act corporations or investment companies. Until 1998, to be a CHIPS participant, a financial institution was required to maintain a branch or an agency in New York City. A non-participant wishing to make international payments using CHIPS was required to employ one of the CHIPS participants to act as its correspondent or agent.

In 2012, it cleared and settled approximately USD 1.5 tn in cross border and domestic payments only. It engages in around 250,000 interbank payments daily. It commands a 96% market share in large value domestic and foreign transfers.

The different steps are as follows:

Chips account at the Fed opens for pre-funding
Banks send and receive payments
CHIPS nets and releases the final payments to the bank
CHIPS nets any unresolved payments. Banks fund their respective negative closing positions.
CHIPS then sends money through fedwire to those banks that are in a positive closing position

CHIPS network can be accessed by any banking organization with a regulated US presence.

One of the most important characteristics of CHIPS payment systems is that it is not real-time. It is a netting engine. Hence those funds that are not time sensitive in nature are transferred through CHIPS.

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Jitendra Mazee
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Re: Meaning of CHIPS - April 18th, 2016

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Originally Posted by bhautik.kawa View Post
CHIPS stands for clearing house interbank payment system. It is one of the largest private sector US dollar funds transfer system. It basically acts like a clearing house.

CHIPS is owned by financial institutions. According to the Federal Financial Institutions Examination Council (FFIEC), an interagency office of the United States government, "any banking organization with a regulated U.S. presence may become an owner and participate in the network." CHIPS participants may be commercial banks, Edge Act corporations or investment companies. Until 1998, to be a CHIPS participant, a financial institution was required to maintain a branch or an agency in New York City. A non-participant wishing to make international payments using CHIPS was required to employ one of the CHIPS participants to act as its correspondent or agent.

In 2012, it cleared and settled approximately USD 1.5 tn in cross border and domestic payments only. It engages in around 250,000 interbank payments daily. It commands a 96% market share in large value domestic and foreign transfers.

The different steps are as follows:

Chips account at the Fed opens for pre-funding
Banks send and receive payments
CHIPS nets and releases the final payments to the bank
CHIPS nets any unresolved payments. Banks fund their respective negative closing positions.
CHIPS then sends money through fedwire to those banks that are in a positive closing position

CHIPS network can be accessed by any banking organization with a regulated US presence.

One of the most important characteristics of CHIPS payment systems is that it is not real-time. It is a netting engine. Hence those funds that are not time sensitive in nature are transferred through CHIPS.

*****
Hey friend, thanks for sharing the information and explaining about the term CHIPS. Well, as we know that the Clearing House Interbank Payments System is a America non-public clearing house for large-value financial transactions. For more detail, please download my presentation.
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