The Clearing House Interbank Payments System (CHIPS) is a United States private

clearing house Clearing house or Clearinghouse may refer to: Banking and finance * Clearing house (finance) * Automated clearing house * ACH Network, an electronic network for financial transactions in the U.S. * Bankers' clearing house * Cheque clearing * Cl ...

for large-value transactions. By 2015, it was settling well over US$1.5 trillion a day in around 250,000 interbank payments in cross border and domestic transactions. Together with the

Fedwire Fedwire (formerly known as the Federal Reserve Wire Network) is a real-time gross settlement funds transfer system operated by the United States Federal Reserve Banks that allows financial institutions to electronically transfer funds between its ...

Funds Service (which is operated by the

Federal Reserve Banks A Federal Reserve Bank is a regional bank of the Federal Reserve System, the central banking system of the United States. There are twelve in total, one for each of the twelve Federal Reserve Districts that were created by the Federal Reserve A ...

), CHIPS forms the primary U.S. network for large-value domestic and international USD payments where it has a market share of around 96%. CHIPS transfers are governed by Article 4A of

Uniform Commercial Code The Uniform Commercial Code (UCC), first published in 1952, is one of a number of Uniform Acts that have been established as law with the goal of harmonizing the laws of sales and other commercial transactions across the United States through UC ...

. Unlike the Fedwire system which is part of a regulatory body, CHIPS is owned by the

financial institution Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...

s that use it. For payments that are less time-sensitive in nature, banks typically prefer to use CHIPS instead of Fedwire, as CHIPS is less expensive (both by charges and by funds required). One of the reasons is that Fedwire is a

real-time gross settlement Real-time gross settlement (RTGS) systems are specialist Electronic funds transfer, funds transfer systems where the transfer of money or securities takes place from one bank to any other bank on a "real-time" and on a "gross (economics), gross" ba ...

system, while CHIPS allows payments to be netted.

Differences from Fedwire

CHIPS differs from the Fedwire payment system in three key ways. First, it is privately owned (by The Clearing House Payments Company LLC), whereas the Fed is part of a regulatory body. Second, it has 47 member participants (with some merged banks constituting separate participants), compared with 9,289 banking institutions (as of March 19, 2009) eligible to make and receive funds via Fedwire. Third, it is a

netting In law, set-off or netting are legal techniques applied between persons or businesses with mutual rights and liabilities, replacing gross positions with net positions. It permits the rights to be used to discharge the liabilities where cross cla ...

engine (and hence, not real-time). A netting engine consolidates all of the pending payments into fewer single transactions. For example, if

Bank of America The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank w ...

is to pay

American Express American Express Company (Amex) is an American multinational corporation specialized in payment card services headquartered at 200 Vesey Street in the Battery Park City neighborhood of Lower Manhattan in New York City. The company was found ...

$1.2 million, and American Express is to pay Bank of America $800,000, the CHIPS system aggregates this to a single payment of $400,000 from Bank of America to American Express. The Fedwire system would require two separate payments for the full amounts ($1.2 million to American Express and $800,000 to Bank of America).

Members

CHIPS is owned by the

s. According to the

Federal Financial Institutions Examination Council The Federal Financial Institutions Examination Council (FFIEC) is a formal U.S. government interagency body composed of five banking regulators that is "empowered to prescribe uniform principles, standards, and report forms to promote uniformity ...

(FFIEC), an interagency office of the

United States government The federal government of the United States (U.S. federal government or U.S. government) is the national government of the United States, a federal republic located primarily in North America, composed of 50 states, a city within a fede ...

, "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 The Edge Act is a 1919 amendment to the United States Federal Reserve Act of 1913, codified at {{UnitedStatesCode, 12, 611, 631, which allows national banks to engage in international banking through subsidiaries chartered by the Board of Governors ...

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.

List of members

, the member participants (with country of ownership) are:{{Cite web , url=http://www.chips.org/about/pages/033742.php , title=CHIPS Customers , access-date=2009-03-21 , archive-url=https://web.archive.org/web/20090327123037/http://www.chips.org/about/pages/033742.php , archive-date=2009-03-27 , url-status=dead * Banco Bilbao Vizcaya, S.A. (Spain) * Banco do Brasil S.A. (Brazil) *

Bangkok Bank Public Company Limited Bangkok Bank Public Company Limited ( th, ธนาคารกรุงเทพ, RTGS: Thanakhan Krung Thep) is one of the largest commercial banks in Thailand. Its branch network includes over 1,165 branches, As of September 2018 within Thail ...

(Thailand) * Bank Leumi USA (United States) * Bank of America, N.A. (United States) *

Bank of China The Bank of China (BOC; ) is a Chinese majority state-owned commercial bank headquartered in Beijing and the fourth largest bank in the world. The Bank of China was founded in 1912 by the Republican government as China's central bank, repl ...

(China) *

Bank of Communications Bank of Communications Limited (BoComm) (; often abbreviated as ), is the fifth-largest bank in mainland China. Established in 1908, the Bank of Communications claims a long history in China and is one of the banks to have issued banknotes in mo ...

(China) * The Bank of Tokyo-Mitsubishi UFJ, Ltd. (Japan) *

Barclays Bank PLC Barclays () is a British multinational universal bank, headquartered in London, England. Barclays operates as two divisions, Barclays UK and Barclays International, supported by a service company, Barclays Execution Services. Barclays traces ...

(United Kingdom) *

BNP Paribas New York BNP Paribas is a French international banking group, founded in 2000 from the merger between Banque Nationale de Paris (BNP, "National Bank of Paris") and Paribas, formerly known as the Banque de Paris et des Pays-Bas. The full name of the group ...

(France) *

Brown Brothers Harriman & Company Brown Brothers Harriman & Co. (BBH) is the oldest and one of the largest private investment banks in the United States. * a "Brown Brothers, who are the oldest as well as one of the largest private banking concerns in the country" — ¶ 2 * b "T ...

(United States) *

Crédit Agricole Crédit Agricole Group (), sometimes called La banque verte ( en, The green bank) due to its historical ties to farming, is a French international banking group and the world's largest cooperative financial institution. It is France's second lar ...

(France) * Citibank, N.A. (United States) *

Commerzbank AG Commerzbank AG () is a major German bank operating as a universal bank, headquartered in Frankfurt am Main. In the 2019 financial year, the bank was the second largest in Germany by the total value of its balance sheet. Founded in 1870 in Hambur ...

(Germany) * Credit Industriel et Commercial (France) *

Deutsche Bank AG Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Stoc ...

(Germany) * Deutsche Bank Trust Co Americas (formerly

Bankers Trust Bankers Trust was a historic American banking organization. The bank merged with Alex. Brown & Sons in 1997 before being acquired by Deutsche Bank in 1999. Deutsche Bank sold the Trust and Custody division of Bankers Trust to State Street Corpor ...

; United States) * Habib American Bank (United States) *

HSBC Bank USA HSBC Bank USA, National Association, an American subsidiary of multinational company HSBC, is a bank with its operational head office in New York City and its nominal head office in McLean, Virginia (as designated on its charter). HSBC Bank USA, ...

(United States) *

Mega International Commercial Bank The Mega International Commercial Bank () is a bank in Taiwan and a subsidiary of Mega Financial Holding Company. It has 108 branches (including foreign department) in Taiwan and 37 overseas units (excluding offshore banking branch). The bank i ...

(Taiwan) *

Intesa Sanpaolo Intesa Sanpaolo S.p.A. is an Italian international banking group. It is Italy's largest bank by total assets and the world's 27th largest. It was formed through the merger of Banca Intesa and Sanpaolo IMI in 2007, but has a corporate identity s ...

(Italy) * Israel Discount Bank of New York (United States) * JPMorgan Chase Bank, N.A. (United States) *

KBC Bank N.V. KBC Group is a Belgian universal multi-channel bank-insurer, focusing on private clients and small and medium-sized enterprises in Belgium, Bulgaria, Czech Republic, Hungary, and Slovakia. It was created in 1998 through the merger of Kredietbank ...

(Belgium) *

Mashreq Bank Mashreqbank PSC (Arabic: ''Orient Bank'') is the oldest privately owned bank in the United Arab Emirates. It was founded as the Bank of Oman in 1967. Today Mashreq provides conventional and Islamic personal banking services including deposits, l ...

(United Arab Emirates) *

M&T Bank M&T Bank Corporation (Manufacturers and Traders Trust Company) is an American bank holding company headquartered in Buffalo, New York. It operates 1680 branches in New York, New Jersey, Connecticut, Pennsylvania, Maine, Maryland, Massachusetts ...

(United States) *

Mitsubishi UFJ Trust and Banking Corporation is the trust banking arm of the Mitsubishi UFJ Financial Group, a Japanese financial services group which is the largest in the world measured by assets. The bank is headquartered in Tokyo, Japan. The merger of Mitsubishi Tokyo Financial Gro ...

(NY Branch; Japan) *

Mizuho Corporate Bank , or MHCB, was the corporate and investment banking subsidiary of Mizuho Financial Group, the second-biggest Japanese financial services conglomerate, prior to the reintegration of investment banking services under the Mizuho Bank name in July 20 ...

- NY (Japan) *

The Bank of New York Mellon The Bank of New York Mellon Corporation, commonly known as BNY Mellon, is an American investment banking services holding company headquartered in New York City. BNY Mellon was formed from the merger of The Bank of New York and the Mellon Financ ...

(United States) *

The Northern Trust Company Northern Trust Corporation is a financial services company headquartered in Chicago that caters to corporations, institutional investors, and ultra high net worth individuals. Northern Trust is one of the largest banking institutions in the Uni ...

(United States) *

The Royal Bank of Scotland The Royal Bank of Scotland plc (RBS; gd, Banca Rìoghail na h-Alba) is a major retail banking, retail and commercial bank in Scotland. It is one of the retail banking subsidiaries of NatWest Group, together with NatWest (in England and Wales) ...

(United Kingdom) *

Société Générale Société Générale S.A. (), colloquially known in English as SocGen (), is a French-based multinational financial services company founded in 1864, registered in downtown Paris and headquartered nearby in La Défense. Société Générale ...

(France) *

Standard Chartered Bank Standard Chartered plc is a multinational bank with operations in consumer, corporate and institutional banking, and treasury services. Despite being headquartered in the United Kingdom, it does not conduct retail banking in the UK, and around ...

(United Kingdom) *

State Bank of India State Bank of India (SBI) is an Indian multinational public sector bank and financial services statutory body headquartered in Mumbai, Maharashtra. SBI is the 49th largest bank in the world by total assets and ranked 221st in the ''Fortune ...

(India) *

State Street Bank and Trust Company State Street Bank and Trust Company, more commonly known as State Street Global Services or simply Global Services, is a subsidiary of State Street Corporation organized as a trust company based in Massachusetts specializing in services to mutual fu ...

(United States) *

Sumitomo Mitsui Banking Corporation is a Japanese multinational banking and financial services institution headquartered in Yurakucho, Chiyoda, Tokyo, Japan. The group operates in retail, corporate, and investment banking segment worldwide. It provides financial products and ser ...

(Japan) *

UBS AG UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...

(Switzerland) *

Wells Fargo Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...

Bank, NY INTL (United States)

References

External links

Fedwire and Clearing House Interbank Payments System
Retrieved Nov. 28, 2005.
The Clearing House Interbank Payment System
Real-time gross settlement Financial services companies based in New York City Interbank networks

Differences from Fedwire

Members

List of members

See also

References

External links