Sweeps, Brokered Deposits and Marketplaces: Who Is Actually Insured

Which of these are you?

• You hold cash in a brokerage account and have never checked where it sits. Find the cash option in your account agreement, then use the shield table below to see whether your cash is a bank deposit, a fund share or neither.
• You hold more than $250,000 in cash at a broker. The question is how many banks the sweep uses and how much lands at each. The worked example below shows how a direct account at one program bank breaks the math.
• You bought a CD through a broker or a savings marketplace. Your coverage is the issuing bank's, added to anything else you hold there. Find the issuer first.
• You use a bank that advertises a reciprocal network and read that the rules changed in September 2026. The rule changed how banks classify reciprocal deposits. It did not change what you are insured for.

Which shield applies to which product?

Four outcomes cover almost every cash product: FDIC deposit insurance, NCUA share insurance, SIPC, or none of the three. The shield follows the legal form of the cash. A money market deposit account at a bank is an insured deposit; a money market fund with a similar name is a security, and no deposit insurance applies to it.

Two limits of this table. SIPC and the SEC both describe protections in general terms, and a specific firm's program can differ, so the account agreement controls. And a single product can sit in two rows: a CD bought through a broker is a bank deposit and a broker-held asset at the same time, which is why the next sections ask who issued it and who keeps the records.

How does a bank sweep count toward the $250,000 limit?

Swept cash is insured at each program bank up to $250,000 per customer, per ownership category, and it is added to every other deposit you hold at that bank in the same category. The SEC's bulletin on sweep programs states the per-bank rule and adds that most brokers place the responsibility on you to monitor your balances.

A bank sweep program moves uninvested cash from your brokerage account into deposit accounts at one or more banks, which may or may not be affiliated with the broker. The SEC says the protections for that cash derive primarily from banking law, including FDIC insurance. That is the whole point: the cash is a bank deposit, so the FDIC rules in Liquidity chapter 4 and 12 CFR Part 330 apply, with two mechanics worth knowing.

First, the limit is per bank and per category, not per program. A program with four banks can in principle insure four times $250,000 for one customer in one category, but only if the program actually places that much at each bank. Which banks, and how much at each, is the program's decision. The SEC notes that brokers may choose banks based on what banks pay the broker for swept funds, on affiliation, or on other business relationships.

Second, the sweep bank's limit is shared with anything you hold there directly. FDIC rules insure deposits in a single category at one bank together (12 CFR 330.3), and an agent's or nominee's deposits are insured as if they were made in your own name (12 CFR 330.7(a)). A savings account you opened at Bank 2 on your own is added to what the sweep placed at Bank 2.

Worked example: the sweep and the direct account at the same bank

Take a hypothetical customer with $900,000 of cash in a brokerage sweep, placed evenly at four program banks: $225,000 at each. The customer also holds $100,000 in a savings account opened directly at Program Bank 2. Both are single-ownership money.

Each bank's insured amount is the smaller of its total and $250,000. Program Bank 2 holds $325,000, so $75,000 is above the limit, and the other three banks have $25,000 of unused room each. Moving the $100,000 direct account to a bank outside the program removes the overlap entirely.

The same worked example shows why a program cap matters. If a program places at most $250,000 at each of four banks, it can absorb $1,000,000 for one customer in one category. A customer with $1,150,000 in cash exceeds that capacity by $150,000, and what the program does with the overflow (leave it as brokerage cash, hold it at an affiliate, or pay it into a fund) is set in the program's disclosure, not by a rule you can assume.

What did the September 2026 reciprocal deposit rule change?

It changed how a bank may classify reciprocal deposits for its own brokered-deposit limits, not what any depositor is insured for. The FDIC issued an interim final rule on September 1, 2026 (91 FR 56022) to match the 21st Century ROAD to Housing Act, whose section 902 took effect on July 11, 2026. The Federal Register entry lists 12 CFR Part 337 as the only CFR part amended.

Some background in plain terms. Under section 29 of the Federal Deposit Insurance Act, a bank that is not well capitalized is restricted from accepting deposits by or through a deposit broker. Deposits received through a reciprocal network, where a bank places a customer's money at other network banks and receives matching deposits in return, can be excepted from being treated as brokered, up to a cap. The Housing Act raised that cap and widened which banks qualify. The FDIC's rule conforms its regulation (12 CFR 337.6) to the new statute and adds clarifications for banks.

Two changes carry numbers. First, the cap. Before the Housing Act, the general cap was the lesser of $5 billion or 20 percent of the bank's total liabilities. The new general cap is the sum of 50 percent of total liabilities up to $1 billion, 40 percent of the portion above $1 billion up to $10 billion, and 30 percent of the portion above $10 billion up to $96,333,333,333. The maximum is $30 billion, reached at about $96.33 billion of liabilities. Second, the qualifying test: an agent institution that is well capitalized must now have a CAMELS composite rating of 1, 2 or 3 rather than 1 or 2.

The $25 billion row is the FDIC's own worked example in the rule. The other rows apply the same formula to hypothetical banks. These are bank-side figures. A bank with a higher cap can hold more reciprocal deposits without treating them as brokered. That says nothing about the safety of any one bank, and CAMELS ratings are confidential supervisory information. The rule itself discusses how reported call-report lines could reveal one, which is why the FDIC plans to make one reporting line confidential.

What it means for you as a depositor is narrow and practical.

• Your limit is unchanged. The $250,000 standard amount is defined in 12 CFR Part 330, which this rule does not amend. Each network bank still insures up to $250,000 per depositor, per category, after adding anything you hold directly there.
• More banks may use networks. Because qualifying and the cap both widened, more institutions may offer reciprocal placement. Treat each offer the same way: ask which banks hold your money, how much stays at your own bank, and whether you can exclude banks. Liquidity chapter 4 lists those questions.
• The rule is interim. The comment period closed on October 1, 2026, and an interim final rule can still be revised, so check the Federal Register for a final version. Liquidity chapter 4 was written before the rule and describes the network structure, which is unchanged; its coverage arithmetic still holds.

What about brokered CDs and the 2024 brokered-deposit proposal?

A brokered CD is insured by the FDIC at the bank that issued it, to the same $250,000 limit, added to whatever else you hold there in the same category. The broker chooses the issuer, so the coverage question is the issuer's total with you, not the broker's.

The FDIC's brokered-deposit rule is 12 CFR 337.6, and it remains in effect. The FDIC proposed changes to it in August 2024, then withdrew the proposal by a notice published on March 14, 2025 (90 FR 12115), saying it no longer intends to issue final rules on it. A 2026 technical correction to 337.6 appeared in the Federal Register on June 3, 2026. None of this changes depositor coverage; it concerns which banks may accept brokered deposits and how they are classified.

The coverage mechanics are the same pass-through logic as in a sweep. For the FDIC to recognize a fiduciary claim, the relationship must be disclosed in the bank's deposit account records, and the details and each owner's interest must be ascertainable from the bank's records or from records kept in good faith by the depositor or someone who undertook to keep them (12 CFR 330.5(b)). If the broker holds the records, a failure of the broker's systems is a recordkeeping risk, not an insurance rule. The FDIC says broker-placed deposits above $250,000 can take longer to pay while it gets documents, and chapter 7 shows how a failure proceeds.

The comparison is the practical point. Splitting the same $300,000 across two issuers removes the overlap. For the cost and liquidity side of brokered CDs, including early exit, see Liquidity chapter 9.

Are savings marketplace deposits insured?

They are insured at the partner bank or credit union where the account is opened, if the ownership records qualify, and not at the marketplace. A marketplace shows offers from many institutions behind one sign-up. The deposit insurance question is always about the institution that holds the account.

Marketplace structures differ. Some open an account in your name at the partner institution; others hold a pooled account for the benefit of customers. The FDIC's guidance for nonbank apps says pass-through coverage needs records that identify who owns the money and how much each person owns, and that deposit insurance does not protect against the insolvency or bankruptcy of a nonbank company. Both statements apply to a marketplace. Terms differ by marketplace and over time, so the account agreement is the document to read.

Run the same overlap check as with a sweep. If you put $200,000 into a marketplace offer from Partner Bank X and already hold $100,000 directly at Partner Bank X in the same category, you hold $300,000 there and $50,000 is above the limit. One sign-up can touch many banks, so keep a list of which institutions hold your money.

For a rate and service comparison with a direct account, see Raisin versus high-yield savings; this chapter covers only what is insured.

What is not insured at all?

Money market funds, safe deposit box contents, crypto assets and stablecoins are not covered by FDIC deposit insurance. The FDIC states that investment products that are not deposits are not covered, and its list of non-insured products includes safe deposit boxes and their contents and crypto assets.

Money market funds. A money market mutual fund is a security. SIPC treats money market funds as securities, and SIPC protects against missing assets at a failed broker, not against a decline in value. So SIPC does not guarantee a fund's $1 share price. The money market deposit account at a bank, with a similar name, is an insured deposit up to the limit. When a statement says "money market," check whether the product is a fund or a deposit account. The fuller comparison is in money market fund vs high-yield savings vs CD. Fund yields and cash drag are covered in brokerage cash drag.

Safe deposit boxes. The FDIC says a safe deposit box is not a deposit account but storage space provided by the bank, so contents, including cash, are not insured by FDIC deposit insurance if damaged or stolen. The bank's rental contract says whether any limited payment applies, and homeowners or renters insurance is the usual route for valuables.

Crypto assets and stablecoins. The FDIC's public fact sheet says deposit insurance does not apply to crypto assets and does not protect against the default, insolvency or bankruptcy of a nonbank entity such as a crypto custodian or exchange. SIPC says digital assets that are unregistered investment contracts are not securities under its statute and are not protected, even at a SIPC-member firm.

SIPC on cash. If you leave $300,000 of cash in a securities account that is not swept to a bank, SIPC's limit for cash is $250,000, which is $50,000 below your balance. SIPC says its protection is up to its limits and covers missing assets. Plan around the stated limit, not a hoped-for recovery.

How do you check your own cash in ten minutes?

List every place cash sits, name the shield for each, and total each bank's balance in each category. Do this once a year and when a program changes, since the SEC's 2014 bulletin says a broker must give 30 days' written notice of changes to a bank sweep program, and your current agreement is the document that controls.

1. Name the cash option. Find your account's cash option in the agreement or settings: bank sweep, money market fund, or plain cash.
2. For a bank sweep, get the bank list and the balance at each bank. Ask the broker for it in writing. The SEC suggests signing up for any alerts about coverage levels.
3. Add direct accounts at those banks. Same bank, same ownership category, one limit.
4. Do the same for CDs and marketplace accounts. Identify the issuing institution, not the seller.
5. Compare each bank total with $250,000. The FDIC's EDIE tool and SwitchWize's coverage calculator, covered in chapter 8, can do the arithmetic.
6. Treat everything else as unprotected. Fund shares, crypto and box contents belong in your plan with no deposit insurance attached.