Using Floating Rates

NBID supports a range of indices for institutions to seamlessly manage account interest rates in line with market and custom institution-defined benchmarks.

Creating a floating rate structure is flexible and straightforward. Floating rates can be applied anywhere rates are configured in the Admin Portal - when setting account interest rates, when creating or editing a Pricing Group, or when adding a new account. In the rate editor, set the Rate Type to Floating and you will be prompted to fill in three fields, corresponding to the following rate formula:

(Index Rate x Multiplier) + Spread = Rate Earned.

• Index: Select from a dropdown of available Market and Custom Indices, each displayed alongside its current rate
• Multiplier: The desired percentage of the index rate that you would like the account's rate to track against (e.g., 1 for 100% of the index, 0.70 for 70%)
• Spread: The fixed spread applied to the multiplier-adjusted index (a negative spread can also be applied)

The portal displays the calculated rate as you configure it. Each rate must resolve to between 0% and 10%.

Floating rates can also be combined with balance tiers: click "Add balance tier" in the rate editor to apply different rate structures based on account balances. Each tier independently sets its own rate type, so a single rate schedule can mix fixed and floating tiers - for example, a fixed rate on balances up to $1M and a floating rate above.

Currently, NBID supports the following Market Index Rates:

• Median EFFR (Effective Federal Funds Rate)
• Federal Funds Target - Upper and Lower Limits
• Overnight SOFR
• CME Term SOFR - 1, 3, 6, and 12 month
• CMT - 1, 3, and 6 month
• WSJ Prime Rate
• Interest Rate on Reserve Balances (IORB)
• Custom Rate Indices (more detail below)

To set a custom index, navigate to the Custom Indices tab in your Sweep Program and click "Create Custom Index." After providing the name, description, and rate, this custom index will be available to select in the rate editor's Index dropdown under Custom Indices. Each of these fields can be managed in the Custom Indices tab by selecting the Edit button next to the index in question; any rate changes will immediately flow through to all accounts tied to the index. Indices can also be deleted, but only when there are no active associated accounts.

Index rates are displayed and calculated as nominal interest rates, and update daily in-line with the release of the prior day's data.

If there are additional indices you would like to be tracked, or if you have any questions on floating rates, please reach out to your Regional Director or to [email protected].