ESDA Program Customer Agreement

ESDA Program Customer Agreement

Section 1.  Agreement to Terms

The Extended Sweep Deposit Account Program ("ESDA" or "ESDA Program") is a bank sweep program associated with my E*TRADE Securities LLC ("Securities") brokerage account. Bank sweep programs automatically transfer cash in a brokerage account to a deposit account at one or more banks.

ESDA is being provided to me by Securities as my agent. In this Agreement, the words "Account Holder," "I," "me," and "my" mean and refer to the person(s) or entity(ies) whose name(s) appears on the Securities brokerage account and who is provided an ESDA as described herein.

I understand and agree that this ESDA Program Customer Agreement ("Agreement") supplements my E*TRADE Securities Agreement and provides additional terms and conditions that apply to the participation of my Securities brokerage account in the ESDA Program for temporary investment of available cash balances into ESDA Program deposit accounts at banks that participate in the ESDA Program ("Program Banks"). This Agreement is binding on me and Securities and on my and Securities' respective heirs, executors, administrators, agents, successors, and assigns.

Securities has appointed Reich & Tang Deposit Solutions LLC ("Reich & Tang") to provide certain administrative, recordkeeping, and other services with respect to the operation of the ESDA. Securities and Reich & Tang earn fees based on the amount of money in the ESDA Program, including my money. Securities will earn a higher fee if I participate in the ESDA Program than if I invest in other cash sweep products. In addition, Program Banks affiliated with Securities will earn a return based on the spread between the rates paid in the ESDA and the returns earned by lending or investing deposit funds gathered through the ESDA. Other cash sweep products may pay me higher returns than the ESDA and I may earn higher rates by directly depositing cash at a Program Bank.

I understand that Securities as my agent may agree to the deposit terms and conditions at each Program Bank where my ESDA Program deposits are held, and such additional terms and conditions will be binding on me. Securities reserves the right to decline any customer's request to participate in the ESDA Program or to terminate any customer's participation in the ESDA Program at any time and for any reason, at its sole discretion.

Various features of the ESDA Program are administered by Reich & Tang. Unless otherwise noted, all authority granted to, or limitations of liability of, Securities shall include its agents and representatives and any service provider, including Morgan Stanley Bank, N.A.; Morgan Stanley Private Bank, National Association; and Reich & Tang.

Section 2.  Introduction

Under the ESDA Program, Securities will automatically sweep available cash balances (as defined in the E*TRADE Securities Agreement) in my Securities brokerage account for deposit into deposit accounts established on my behalf at the Program Banks. The ESDA is designed to offer up to $500,000 in FDIC (as defined below) coverage to individual accounts ($1,000,000 for joint accounts). The deposit accounts will be subaccounts of omnibus deposit accounts established by Securities on my behalf and on behalf of other Securities brokerage customers participating in the ESDA Program. I understand that individual deposit accounts will not be opened for me at any Program Bank.

The ESDA Program is available to the following types of accounts: individual, joint, certain business entities including corporations, and certain fiduciary and trust accounts provided the beneficiaries are individuals or otherwise eligible to maintain a bank deposit. It is not available to retirement accounts or investment advisory accounts.

I will receive interest on my ESDA Program balances held on deposit at the various Program Banks as described below.

Section 3.  Deposit Procedures

By enrolling in the ESDA Program, I consent to having the uninvested cash balances in my Securities brokerage account each day automatically deposited into accounts at the Program Banks.

The timing of the deposits will occur as follows:

• Any cash that is posted and cleared before 11:30 a.m. ET will be transferred via an intraday sweep on the same business day.
• Any cash that is posted and cleared after 11:30 a.m. ET will be transferred via an overnight sweep.
• Transfers between ESDA Program accounts and subaccounts and my Securities brokerage account are described below under "Section 4. Withdrawal Procedures."
• The timing of these sweeps is subject to change at Securities’ discretion with no further notice.

There is no minimum amount required as an initial deposit or for subsequent deposits, although individual Program Banks may establish minimum amounts for deposits to be swept to the specific institution.

Until my funds are received in appropriate form and processed by the Program Banks, I understand that my funds may not be FDIC insured. For example, after my excess funds are swept out of my brokerage account carried at Securities, my funds may be held at an intermediary bank intraday, overnight, or over the weekend to the next bank business day or longer before being actually received by the Program Banks. During any such period before my investable funds are received by the Program Banks, any amount of my funds held by the intermediary bank in excess of the standard maximum deposit insurance amount ("SMDIA") for an FDIC-recognized category of account ownership (currently, $250,000) will not be covered by FDIC insurance. However, the ESDA Program is designed such that it undertakes to have funds deposited at the Program Banks on the same business day that they are transferred to the intermediary bank.

I understand that I will be able to access ESDA Program funds only through my relationship with Securities.

Section 4.  Withdrawal Procedures

By enrolling in the ESDA Program, I agree that each business day, as needed, Securities or its agent bank will withdraw my cash from the omnibus deposit accounts maintained at one or more of the Program Banks to satisfy any debit balance in my Securities account. A debit is created to satisfy a securities purchase or a request for a withdrawal of funds from my brokerage account, including when I write a check, wire funds, or withdraw funds using my debit card. I am responsible if I have insufficient funds in the ESDA Program to satisfy any such debit balance.

Transfers of my ESDA cash balances from the Program Banks back to my Securities brokerage account may be made only by Securities as my agent or its service provider as subagent.

The Program Banks do not currently impose holds or limits on the availability of funds for transfer from the deposit accounts to my Securities brokerage account. Federal banking regulations, however, require the Program Banks to reserve the right to require seven days' prior written notice before transferring funds back to my Securities brokerage account, if my funds are held by Program Banks in money market deposit accounts (“MMDAs”). I understand that the Program Banks may, at their sole discretion, choose to exercise this right in the future.

Section 5.  Selection of Program Banks

Securities enters into agreements with a variety of Program Banks that agree to accept funds from the ESDA Program.

Program Banks may be added or removed based on various factors: Banks may decide to leave ESDA or Securities may decide to add banks to, or remove banks from, the ESDA Program. To the extent permitted by applicable law, changes in Program Banks may or may not be communicated in advance.

A list of Program Banks accompanies this Agreement. The Program Banks that hold my ESDA Program funds may change at any time during a statement period. If I want a list of Program Banks or to know the Program Banks at which my ESDA Program funds were located as of the close of business on the immediately preceding business day, I must contact Securities' customer service department ("Customer Service") at 800-387-2331 or log into my account at etrade.com. Such information is not available on a real-time basis.

Each Program Bank is a separate depository institution insured by the Federal Deposit Insurance Corporation ("FDIC"). I can obtain publicly available financial information for all Program Banks at the FDIC's website at fdic.gov; by contacting the FDIC's Division of Information and Research by writing to Federal Deposit Insurance Corporation, Division of Information and Research, 550 17th Street NW, Washington, DC 20429-9990; or by calling the FDIC's Division of Information and Research at 1-877-275-3342.

Neither Securities nor Reich & Tang guarantees the financial condition of any Program Bank or the accuracy of any publicly available information concerning a Program Bank. Neither Securities nor Reich & Tang is responsible for any insured or uninsured portion of any deposits at a Program Bank. I expressly give my consent to Securities, Reich & Tang, and their service providers to provide my customer account information to Program Banks for purposes of my involvement in the ESDA Program.

Section 6.  Exclusion of Program Banks

I understand that I should review the list of all the Program Banks, and that I may exclude any Program Bank from holding my ESDA Program cash balances by notifying Securities. I may exclude any Program Bank from holding my deposits for any reason, including because I hold other deposits in the same capacity at that Program Bank (see "Section 8. Federal Deposit Insurance Corporation Insurance." below).

There will be a delay between the time I make the request and the time that the Program Bank is excluded. If I exclude one or more Program Banks, the maximum level of FDIC insurance available to me under the Program may be reduced.

Section 7.  Allocation of Funds to the Program Banks

Each Program Bank will establish, and from time to time reestablish, the level of deposits that it is willing to accept and the amount of interest and fees that it is willing to pay under the ESDA Program. Deposits are allocated among the Program Banks pursuant to the allocation algorithm described below. Securities does not exercise discretion with respect to how deposits are actually allocated among the Program Banks.

Reich & Tang's allocation algorithm is a nondiscretionary allocation methodology pursuant to which the Program Banks are ranked according to the following objective process at the open of each business day ("Deposit Allocation Ranking").

• Each Program Bank is initially priority ranked according to the amount of stated capacity that it has available to accept deposits from brokerage accounts participating in the ESDA Program for that day (this is referred to as the Program Bank's "target level"). Under this ranking process, the Program Bank with the greatest target level is ranked first, the Program Bank with the second-greatest target level is ranked second, and so on.
• The initial priority ranking shall be adjusted, as needed, to take into account Program Bank–specific conditions that may, pursuant to the terms of its participation agreement and certain regulatory requirements, restrict its ability to receive individual client deposits under the ESDA Program below certain minimum dollar amounts (e.g., only deposits of $100,000 or more per depositor may be accepted) or restrict its ability to receive deposits from certain account types.

With respect to adjustment above, Program Banks that require specific deposit minimums per depositor or that restrict eligible account types will be moved to the top of the priority ranking, first based on the dollar amount of any depositor minimum and then based on the target level, each by descending amounts.

Once established, all customer funds participating in the ESDA Program are allocated (and reallocated), each business day, to the Program Banks according to the current Deposit Allocation Ranking, subject to (i) customer opt-out rights as to any Program Bank(s); (ii) the Program Bank's depositor minimum, where applicable; (iii) the Program Bank's restriction of deposit by client type, where applicable; and (iv) the Program Bank's stated capacity. Customer funds are allocated to the Program Banks individually, based on deposit size. With respect to the allocation of my funds, the first Program Bank in the Deposit Allocation Ranking for any business day will receive my funds first, until such Program Bank holds an amount of my funds not to exceed $248,500. Deposit thresholds are set slightly below the FDIC insurance limit to allow for accrued interest on the deposits at the Program Banks. To the extent that I have allocable funds in excess of the then maximum amount per Program Bank, say $248,500, my funds are then allocated to the second Program Bank in the Deposit Allocation Ranking, and this process is continued until all of my funds are allocated or the FDIC insurance limit is reached. To the extent that a Program Bank has already received deposits up to such Program Bank's target level, or to the extent the level of my deposits is insufficient to satisfy a Program Bank's per-depositor minimum deposit requirements, or my deposits do not satisfy the Program Bank's account type requirements, I understand that such Program Bank will be skipped when allocating my funds, and my funds will be allocated to the next Program Bank in the Deposit Allocation Ranking. Any Program Banks for which I exercise my opt-out rights will also be skipped.

If the amount of my funds in the ESDA Program exceeds the amount that can be insured by the FDIC through the ESDA Program ("Program Cap"), excess amounts are allocated to any one of the Program Banks, where such amounts may be uninsured.

Neither Securities nor Reich & Tang is responsible for any insured or uninsured portion of my deposits in any of the Program Banks.

Section 8.  Federal Deposit Insurance Corporation Insurance

The federal deposit insurance provided by the FDIC protects me up to applicable limits against the loss of my ESDA Program funds if a Program Bank into which my ESDA Program funds are swept fails. FDIC deposit insurance is backed by the full faith and credit of the United States. I understand that Securities urges me to discuss with my attorney the insurance coverage afforded to my deposits, including deposits in the ESDA Program.

All deposits that I hold at a Program Bank in the same ownership capacity (whether or not through the ESDA) are eligible for FDIC insurance up to the SMDIA, which is $250,000. However, deposits through the ESDA Program are limited to $248,500 ($497,000 for joint accounts) at each Program Bank (except for Program Banks used for overflow of deposits in excess of the Program Cap, as explained above). Reich & Tang, at its sole discretion, may limit my total ESDA deposits at any Program Bank to an amount less than the applicable ESDA Program Cap. Deposit thresholds are set slightly below the FDIC insurance limit to allow for accrued interest on the deposits at the Program Banks.

For accounts that have multiple levels of fiduciary relationships, the FDIC’s regulations impose special requirements for obtaining pass-through FDIC insurance coverage, up to the SMDIA (currently $250,000 for each FDIC-recognized category of account ownership). In these situations, in order for FDIC insurance coverage to pass through to the true beneficial owners of the funds, it is necessary (i) to expressly indicate, on the records of the insured depository institution that there are multiple levels of fiduciary relationships (ii) to disclose the existence of additional levels of fiduciary relationships in records, maintained in good faith and in the regular course of business, by parties at subsequent levels and (iii) to disclose, at each of the level(s), the name(s) and the interest(s) of the person(s) on whose behalf the party at the level is acting. No person or entity in the chain of parties will be permitted to claim that they are acting in a fiduciary capacity for others unless the possible existence of such a relationship is revealed at some previous level in the chain. If your Program Deposits are beneficially owned through multiple levels of fiduciary relationship, you must take steps to comply with these special requirements in order to obtain deposit insurance coverage. 

If you have questions about FDIC deposit insurance coverage, you may call the FDIC at 1-877-275-3342 or visit the FDIC’s website at fdic.gov. You should also review carefully the information available on the FDIC’s website at fdic.gov. You also may wish to utilize “EDIE The Estimator,” the FDIC’s electronic insurance calculation program, which is found at edie.fdic.gov. Other information regarding FDIC insurance coverage may be found at the “Deposit Insurance” section of the “Quick Links for Consumers & Communities” on the FDIC’s website at fdic.gov/quicklinks/consumers.html. You may also write to the FDIC at the following address: FDIC Office of Consumer Affairs, 550 17th Street NW, Washington, DC 20429. 

Neither Securities nor Reich & Tang monitors or takes any responsibility for money I may have at a Program Bank outside the ESDA Program, including any deposits I have at Morgan Stanley Bank, N.A. or Morgan Stanley Private Bank, National Association.

I understand that FDIC insurance applies on a per-bank basis.

I am responsible for monitoring the total amount of deposits that I have at each Program Bank to determine the extent of FDIC deposit insurance available to me. Any deposits (including Certificates of Deposit) that I maintain with a Program Bank, directly or through an intermediary, including through multiple accounts held at Securities, Morgan Stanley Smith Barney LLC, or another broker-dealer in the same ownership capacity, will be aggregated with my ESDA Program deposits for the purpose of determining the SMDIA.

If FDIC deposit insurance payments become necessary, there is no specific time period during which the FDIC must make insurance payments available, and I may not earn interest on my deposits from the time the Program Bank is closed. Furthermore, I understand that I may be required to provide certain documentation to the FDIC before insurance payments are made. The unavailability of funds at any Program Bank does not affect my responsibility to Securities for all debits to my Securities brokerage account, including my obligation to settle trades and pay transactions drawn on my account.

I understand that unless otherwise specifically disclosed to me, any other assets held in my Securities brokerage account:

• are not insured by the FDIC;
• are not deposits or other obligations of Morgan Stanley Bank, N.A. or Morgan Stanley Private Bank, National Association, or any Program Bank, and are not guaranteed by those banks; and
• are subject to investment risks, including the possible loss of the principal invested.

Section 9.  Interest

I will earn interest on my deposits in the ESDA Program at rates determined by Securities pursuant to its agreements with the Program Banks. Those rates are subject to change at any time and may fluctuate on a daily or even an intraday basis. Interest rates available to me may be tiered based on a variety of factors and may vary from rates made available to other customers.

The amount of paid interest and the Annual Percentage Yield ("APY") applicable to my cash in the ESDA Program will be stated on my brokerage account statement. I may obtain current interest rates, by visiting etrade.com/rates or by contacting Customer Service at 800-387-2331, or +1 678 624 6210 from outside the United States, 24 hours a day, seven days a week.

Interest will be compounded daily and posted monthly to each Program Bank account. Interest will accrue on deposits from the day they are received in investible form by the Program Bank through the business day preceding the date of withdrawal from the Program Bank. The "daily balance method" is used to calculate interest. This method applies a daily periodic interest rate to the principal in the account each day. The daily rate is 1/365 (or 1/366 in a leap year) of the applicable annual rate. The interest rate I earn on my ESDA Program deposits may be higher or lower than the rates available to depositors making non–ESDA Program deposits with Program Banks directly, through other types of accounts at Securities, with other depository institutions in comparable accounts, or with alternative short-term investment options. Any fees imposed under the ESDA Program could reduce earnings on my ESDA Program deposits. I understand that I should compare the terms, rates of return, required minimum amounts, charges, and other features of the ESDA Program with other accounts and investment alternatives.

Section 10.  Fees

I understand and agree that Securities and Reich & Tang each receive compensation for services provided to the Program Banks based on ESDA Program deposit account balances with those Program Banks. Securities has the right to waive all or any part of its compensation paid by unaffiliated Program Banks.

The interest that I receive on my ESDA cash balances deposited into Program Banks will be lower than the monthly fees that Securities or Reich & Tang receive in compensation from Program Banks for services provided. I understand that Securities may change the fees paid to Securities and its affiliates and service providers with respect to the ESDA Program from time to time.

The ESDA Program creates other financial benefits for Securities and one or more of its affiliates. Morgan Stanley Bank, N.A. and/or Morgan Stanley Private Bank, National Association may use the cash balances in its ESDA Program deposit accounts to fund certain lending and investment activity. As with other banks, the profitability of Morgan Stanley Bank, N.A. or Morgan Stanley Private Bank, National Association is determined in large part by the difference, or "spread," between (i) the interest paid and other fees and costs incurred by it on the ESDA Program deposit accounts and (ii) the interest or other income earned on its loans, investments, and other assets. ESDA Program deposit accounts at Morgan Stanley Bank, N.A. and Morgan Stanley Private Bank, National Association provide a stable source of investable and lendable funds for them, which may be available at a lower cost than other funding sources.

Section 11.  Information and Statements

Information with respect to my ESDA, the names of each of the Program Banks where my ESDA funds are held, my ESDA balances both in the aggregate and at each of the Program Banks, and interest paid, as well as the transfers of my ESDA cash balances between the ESDA Program deposit accounts and my linked Securities brokerage account, will appear on my periodic Securities brokerage account statement. I will not receive a separate statement from the Program Bank(s) or Reich & Tang. My periodic account statement will be provided at least quarterly. My Securities brokerage account statement will also contain information regarding the cash balances held for me by Securities. I should retain all account statements.

I understand that I must notify Securities' Customer Service immediately of any problems or errors regarding my ESDA that I note on my Securities brokerage account statement and in no event later than 60 days after the date of the statement on which the problem or error first appeared.

On my request, Securities will liquidate my ESDA cash balances, either by transferring the balances to my linked Securities brokerage account or, at Securities' discretion, by remitting the remaining balance to me.

In case of a change of address and/or contact information, I am responsible for providing Customer Service with my new address and/or contact information. 

Section 12.  Alternatives to the ESDA Program

I understand that, at any time, I may withdraw my consent to participate in the ESDA Program. If I withdraw my consent or if Securities terminates my ability to participate in the ESDA Program and I do not designate a replacement sweep option for my Securities brokerage account, the uninvested cash held through the ESDA Program will be returned to my Securities brokerage account and invested in the E*TRADE Cash Balance Program unless I provide Securities with different instructions.

Section 13.  Business Days and Days of Operation

The ESDA Program will operate on all days when both the NYSE and the Federal Reserve Bank of New York are open for business. These are referred to as "business days" in this Agreement.

Section 14.  Inactive Accounts

Securities may be required by law to turn over (escheat) funds in my ESDA deposited at Program Banks to a state, typically my state of residence, based on account inactivity for a certain time period established by applicable state law. If funds are remitted to the state, I may file a claim with the state to recover the funds.

Section 15.  Tax Withholding and Reporting

The discussion in this document pertaining to US federal tax considerations is not intended, or written to be used, and cannot be used, for the purpose of avoiding penalties. Such discussion is written to support the promotion or marketing of the transactions or matters addressed herein. I should seek personalized tax advice from an independent tax advisor that is based on my own particular circumstances.

The interest that I receive from my ESDA Program deposit balances is generally fully subject to federal, state, and, where applicable, local tax. Securities may be required to withhold US federal income tax at the prevailing rate on all taxable distributions payable to certain depositors who fail to provide their correct Taxpayer Identification Number or to make required certifications or who have been notified by the Internal Revenue Service ("IRS") that they are subject to backup withholding. Interest earned on accounts held by entities (individuals or corporations) that are neither citizens nor residents of the United States, except for Canadian residents, is not subject to withholding tax.

I acknowledge that the ESDA Program uses my tax identification information or other unique identifier based on my Tax Identification Number to allocate my insured deposits across Program Banks under the ESDA Program. If I do not provide, or if I do not have, a Tax Identification Number, my funds may not be allocated across Program Banks to provide me with expanded FDIC insurance under the provisions of this Agreement.

An IRS Form 1099 will be sent to me by Securities for each year, showing the amount of interest income I have earned from my ESDA Program deposit balances. I will not receive a Form 1099 if I am not a citizen or resident of the United States or Canada.

Section 16.  Limitation of Liability

To the maximum extent permitted by law, in no event shall Securities, Reich & Tang, or their respective affiliates be liable for any indirect, consequential exemplary, special, incidental, or punitive damages of any nature, whether such liability is asserted on the basis of contract, tort (including negligence or strict liability), or otherwise, including without limitation loss of profits, loss of goodwill, or interruption of business.

Section 17.  Changes to Terms and Conditions

Securities may change these terms and conditions from time to time at its discretion by providing 30 days' prior notice to you. Your continued use of your brokerage account and the ESDA Program without notifying Securities of your election to terminate your participation in the ESDA Program shall indicate your consent to the revised terms and conditions.

SCHEDULE A

Program Banks for E*TRADE Securities

Program Banks

Ally Bank

Associated Bank, National Association

Bank of Hope

Bank Rhode Island

BBCN Bank renamed to Bank of Hope

BMO Harris Bank National Association

Brookline Bank

Citibank, National Association

Comenity Bank

Comenity Capital Bank

Customers Bank

East West Bank

First Federal Bank

First Horizon Bank

First-Citizens Bank & Trust Company

Gorham Savings Bank

HSBC Bank USA, National Association

JPMorgan Chase Bank, National Association

Manufacturers Bank

Mizuho Bank (USA)

Morgan Stanley Bank, National Association

Morgan Stanley Private Bank, National Association

MUFG Union Bank, National Association

PlainsCapital Bank

Regions Bank

Texas Capital Bank

The Bank of New York Mellon

TIAA, FSB

TIAA-Cref Trust Co., FSB renamed to TIAA, FSB

U.S. Bank National Association

Umpqua Bank

Valley National Bank

Wells Fargo Bank, National Association

This list of Program Banks may be amended from time to time.

Last updated: June 2023

Contact Information

Mailing address for:
E*TRADE Securities

PO Box 484
Jersey City, NJ 07303-0484

Toll-free Telephone Number for Customer Service:
800-387-2331, 24 hours a day, every day of the week.

From outside the United States:
+1 678 624 6210

Website: etrade.com 

0623-ESDA-B68038