Account Sweeping Agreement

An account sweeping agreement is the contract under which a bank is authorised to move money automatically between a customer's accounts, or between an account and an investment product, according to pre-agreed rules. A typical agreement sets a target balance for an operating account and instructs the bank to sweep any excess each evening into an interest-bearing account or money market fund, and to sweep funds back when the balance falls short. Corporate versions cover groups of accounts, including zero balance accounts that are emptied daily into a central concentration account. The agreement records the accounts involved, the timing, the target and minimum balances, how interest is calculated, and who bears risk if the receiving product loses value. The mechanics are described under sweep accounts, and the retail investment version under deposit sweep program.