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What are DTC-eligible CDs?

DTC-eligible CDs are time deposits issued by Federal Deposit Insurance Corporation (FDIC)-insured financial institutions and are underwritten by Financial Industry Regulatory Authority (FINRA)-registered broker-dealers. Also known as “brokered deposits,” this type of deposit is offered to investors by issuing institutions looking to raise liquidity and funding through the wholesale and institutional markets.

Unlike traditional CDs, and similar to other securities, DTC-eligible CDs are issued in book entry form and use the CUSIP system for identification and trading in a primary and secondary market.

Similar to traditional CDs and other fixed-income products offered by Multi-Bank Securities, Inc. (MBS), DTC-eligible CDs are often considered a preferred investment alternative for clients concerned about the safety of their principal and the continuity or predictability of cash flows.

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Who is the DTC?

The Depository Trust Company (DTC) is the world’s largest securities depository. Owned by its members in the financial industry, the DTC is a registered clearing agency with the U.S. Securities and Exchange Commission (SEC), a member of the Federal Reserve System and a limited purpose trust company under New York Banking Law.

What are Physical CDs?

Physical CDs are time deposits or certificates of deposit safekept at a depository held in the name of the investing entity. A copy of the CD and the new account documents are physically delivered to the institutional investor at the time the funds are transferred. All required information by the issuer is sent, received and signed by the investing entity, and interest payments are distributed to the owner of record. Multi-Bank Securities, Inc. offers both “fee-based” and “no-fee” physical CD rates.

Physical CDs can be either direct or custodial in nature. Investors send funds either directly to the issuing institution or they send funds to a designated third-party “custodian” – usually another bank. Physical CDs are available as several types, including as fixed-rate CDs and as step-up and step-down CDs.