DEFINITION of 'Clearing House Interbank Payments System - CHIPS'

The primary clearing house in the U.S. for large banking transactions. CHIPS settles over 250,000 of trades per day, valued in excess of $1 trillion. CHIPS and the Fedwire funds service used by the Federal Reserve Bank combine to constitute the primary network in the U.S. for both domestic and foreign large transactions denominated in U.S. dollars.

BREAKING DOWN 'Clearing House Interbank Payments System - CHIPS'

CHIPS differs from the Fedwire transaction service in several respects. First and foremost, it is cheaper than the Fedwire service, albeit not as fast, and the dollar amounts required to use this service are lower. It is also privately owned by member banks and has only 46 members (as of 2006), compared to the approximately 50,000 members that use the Fedwire service. Finally, CHIPS acts as a netting engine, where payments between parties are netted against each other instead of the full dollar value of both trades being sent.

RELATED TERMS
  1. Fedwire

    A real-time gross settlement system (RTGS) of central bank money ...
  2. Private Sector Adjustment Factor ...

    A method used by the Federal Reserve Board for calculating the ...
  3. Euro Feds

    A federal wire transmission advancing funds in Eurodollars from ...
  4. Federal Reserve System - FRS

    The central bank of the United States. The Fed, as it is commonly ...
  5. Bilateral Credit Limit

    Intraday credit limits set by two institutions for use with one ...
  6. Overdraft Cap

    The maximum dollar limit that a bank will send to another financial ...
Related Articles
  1. Investing

    Banking On Blue Chip Stocks

    Discover what makes blue chip stocks such attractive investments.
  2. Investing

    What does "Blue Chip" Mean?

    Describing a business as “blue chip” comes from the game of poker, where blue chips are the most valuable.
  3. Investing

    Apple Undercuts Intel Processor's Role In Next MacBook

    Apple is developing a new chip that will shift the low-power mode functionality from Intel's chips onto its own.
  4. Investing

    5 Things ARM Holdings Wants You to Know (ARMH)

    ARM Holdings (NASDAQ: ARMH), the company that designs and licenses chips based on the ARM architecture, reported its first-quarter earnings a few weeks ago. The results were solid, with both ...
  5. Insurance

    Medicaid vs. CHIP: Understanding the Differences

    Medicaid and CHIP are both designed to provide low-income children with health care coverage. Find out about the differences between the two programs.
  6. Investing

    Intel and Micron Unveil Next-Gen Memory Technology (INTC, MU)

    Intel (NASDAQ: INTC) and Micron Technology (NASDAQ: MU) recently announced the development of a next-gen memory chip that will be 1,000 times faster and 1,000 times more durable than the NAND ...
  7. Investing

    3 Key Numbers ARM Holdings Investors Need to Know (ARMH)

    ARM Holdings (NASDAQ: ARMH) has experienced tremendous growth over the past decade as chips built on the ARM architecture have dominated the mobile market, powering the vast majority of smartphones ...
  8. Financial Advisor

    Overview of Fidelity Blue Chip Growth Fund (FBGRX)

    Learn about the Fidelity Blue Chip Growth Fund in this fund overview including information on its investment performance and portfolio managers.
  9. Tech

    Top 5 Holding Analysis of Fidelity Blue Chip Fund

    Learn about the Fidelity Blue Chip Growth mutual fund, its portfolio makeup, and read a complete analysis of the fund's top five holdings.
RELATED FAQS
  1. What does CHIPS UID mean?

    CHIPS UID stands for Clearing House Interbank Payments System Universal Identifier. This is just a fancy name for an electronic ... Read Answer >>
  2. What are direct costs of sales?

    Learn about direct costs of sales and cost of goods sold (COGs), what direct costs of sales measures and how to calculate ... Read Answer >>
  3. How does the Private Sector Adjustment Factor (PSAF) affect competition in the private-sector?

    Look at a simple breakdown of the Private Sector Adjustment Factor (PSAF), set by the Federal Reserve to recover imputed ... Read Answer >>
  4. What consumer products drive most of the demand for chips produced by semiconductor ...

    Learn how the demand for consumer products, such as smartphones and cloud-based services, is increasing the market for semiconductor ... Read Answer >>
  5. Why are EMV cards more secure than traditional debit and credit cards?

    Learn about EMV chip technology for debit and credit cards. Explore different transactions where EMV chips making paying ... Read Answer >>
Hot Definitions
  1. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  2. Life Insurance

    A protection against the loss of income that would result if the insured passed away. The named beneficiary receives the ...
  3. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity demanded of a particular good and a change in its price. Price ...
  4. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  5. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center