Summary
The Charles Schwab Corporation (SCHW) has entered into a Second Amended and Restated Insured Deposit Account Agreement (the "2023 IDA") with TD USA Bank, N.A., and TD Bank, N.A., replacing a previous agreement from 2019. This agreement governs the sweep of client cash balances into deposit accounts at TD Depository Institutions. The updated terms extend the agreement's primary term to July 1, 2034, offering a longer-term commitment for managing client cash. Key changes include revised deposit balance management. Through September 10, 2025, Schwab must maintain deposit balances within a range tied to customer withdrawals and a 'Cap' of $30 billion above the Floor (which is linked to Fixed Rate Obligation Amounts or FROA balances). Post-September 10, 2025, Schwab gains more discretion, but must maintain balances between $60 billion (Floor) and $90 billion (Cap). Furthermore, Schwab's ability to terminate up to $5 billion of FROA balances has been clarified, and the previous 80% restriction on designating deposit balances as FROAs has been removed, granting Schwab greater flexibility in its cash management strategies.
Key Highlights
- 1Extension of Insured Deposit Account Agreement with TD Depository Institutions to July 1, 2034.
- 2Revised deposit balance management with specific 'Floor' and 'Cap' amounts and timelines.
- 3Increased flexibility for Schwab regarding the management and designation of Fixed Rate Obligation Amounts (FROA).
- 4The agreement is with TD Depository Institutions, which are subsidiaries of TD Bank, a significant shareholder in Schwab.
- 5Schwab continues to receive an unchanged monthly fee for recordkeeping and support services.
- 6The 2023 IDA supersedes the previous agreement dated November 24, 2019.