CDARS® Institutional Investors, Including Businesses, Non-Profits, and Credit Unions
Traditional Options for Cash Management by Institutional Investors
Many cash management options, such as auction/adjustable rate preferreds, CMOs, commercial paper, money market funds, and Agencies, are not FDIC-insured and may carry undesirable risks.
The CDARS Advantage
CDARS® is one of the safest, not to mention smartest, investment vehicles for institutional investors looking to protect their investments while earning CD-level returns.
CDs placed through CDARS offer institutional investors, including corporations, foundations, and endowments:
- Access to multi-million-dollar FDIC insurance;
- The power of daily compounding;
- A finite maturity date (in contrast to auction rate or some adjustable rate securities); and
- The ease of working through one trusted relationship, earning one rate (per maturity), and receiving consolidated statements.
CDARS received very positive reviews in a March 8 Standard and Poor’s Credit FAQ piece entitled, "What Effect Will The Certificate Of Deposit Accounts Registry Service Program Have On Fund Ratings?” In the report, Standard and Poor’s stated that, from a credit perspective, it deems CDs issued through CDARS to be “AAA/A-1+” equivalent. Excerpts from the report are available at Crane Data
Investing through CDARS can be a strong alternative to U.S. Treasuries. Like Treasuries, FDIC insurance is backed by the full faith and credit of the U.S. government.
As shown below, historically, CDARS rates have compared favorably to U.S. Treasuries.
Treasury Rates are Constant Maturity Yields as reported by the U.S. Treasury on the business day rates are posted. APYs shown are calculated using a 365-day accrual basis and daily compounding of interest. They do not take into account the fees and/or commissions earned by brokers. Data in the chart reflect past performance and do not guarantee future rates or returns.
CDARS CDs are considered bank deposits. They are not DTC eligible and, currently, no secondary market exists. Early withdrawals are available, but require the payment of a substantial penalty.
Weekly and overall limits apply. If a depositor is subject to restrictions with respect to the placement of funds in depository institutions, it is the responsibility of the depositor to determine whether the placement of the depositor’s funds through CDARS or a particular CDARS transaction satisfies those restrictions. Funds may be submitted for placement only after a depositor enters into a CDARS Deposit Placement Agreement with a member institution. The agreement contains important information and conditions regarding the placement of funds by the member institution through CDARS. CDARS is a registered service mark of Promontory Interfinancial Network, LLC.