If an income payment date falls on a month-end weekend, when does the Federal Reserve pay custodians?

When an income payment date falls on a month-end weekend, the Federal Reserve pays custodians on the Monday after the pay date. This practice ensures that the payment is processed on a business day when banks and financial institutions are operational and able to handle transactions.

The reasoning behind this timing is grounded in the understanding that payments must be made on days when financial systems are functioning properly. If a payment date is set for the weekend, it is prudent to shift the payment to the next available business day to avoid complications that could arise during non-business hours, such as banking holidays or weekends, which would prevent the funds from being transferred or processed effectively.

This approach helps maintain the integrity and timeliness of cash flows for custodians, ensuring they can execute transactions on behalf of their clients without interruption. Furthermore, institutions rely on predictable payment schedules, and shifting to the following Monday provides clarity in financial planning and cash management for all parties involved.