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.

BREAKING DOWN '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.

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