Next-Day Funds

AAA

DEFINITION of 'Next-Day Funds'

In banking, money that becomes available for use on the day following the day it is deposited. In investing, next-day funds are available the business day following a trade; however, most trades have used same-day funds settlement since 1996, based on the Group of 30's recommendations for improving settlement and clearance risk, efficiency and cost. Same-day funds are available the day the trade is completed or the day the funds are deposited.

INVESTOPEDIA EXPLAINS 'Next-Day Funds'

Bank deposits must be cleared and settled before they become available. This involves transferring deposits and withdrawals between banks and ensuring that sufficient funds are available to complete the transactions.

RELATED TERMS
  1. Same-Day Funds

    Money that can be transferred or withdrawn the same day that ...
  2. Group Of 30 - G30

    A consultive group composed of academics and financiers whose ...
  3. Continuous Net Settlement - CNS

    An automated book-entry accounting system. CNS centralizes the ...
  4. Automated Clearing House - ACH

    An electronic funds-transfer system run by the National Automated ...
  5. Clearing

    The procedure by which an organization acts as an intermediary ...
  6. Deposit

    1. A transaction involving a transfer of funds to another party ...
Related Articles
  1. The Rise Of The Modern Investment Bank ...
    Insurance

    The Rise Of The Modern Investment Bank ...

  2. The Evolution Of Banking
    Credit & Loans

    The Evolution Of Banking

  3. Inside National Payment Systems
    Economics

    Inside National Payment Systems

  4. Wanna Be A Bigwig? Try Investment Banking
    Professionals

    Wanna Be A Bigwig? Try Investment Banking

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center