National Financial, Fidelity Investments' clearing unit, has started a program that enables retail broker/dealers to deposit or "sweep" cash in their customers' eligible brokerage accounts into multiple interest-bearing bank accounts that offer Federal Deposit Insurance Corp. coverage.

The National Financial Bank Deposit Sweep Program allows broker/dealers to allocate their customers' brokerage cash across as many as eight banks.

Under the program, principal and accrued interest are eligible for FDIC insurance up to the current $250,000 per bank, or combined coverage of up to nearly $2 million when deposits are spread across multiple banks in the network.

For example, an investor deposits $600,000 into a brokerage account and then selects three program banks. The next business day, $246,500 is deposited in the first program bank, $246,500 is deposited in a second program bank and the remaining $107,000 is deposited into a third program bank, providing the customer with FDIC coverage for the entire $600,000.

The National Financial Bank Deposit Sweep Program complements National Financial's single-bank sweep program. Launched in 2005, it allows broker/dealers with affiliated banks to deposit their customers' brokerage cash into an FDIC-insured account at their bank.

In addition to the FDIC coverage, the new program offers other features and benefits, including tiered interest rates and consolidated statements.

National Financial, of Boston, offers brokerage services to over 310 clients, from retail broker/dealers to institutional investment firms. It had $520 billion of assets under custody at June 30.

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