Daylight exposure

1. Credit transfer

An intra-day exposure of a bank when account is in an overdraft position at any time during the business day vis-à-vis credit extended for a period of less than one business day.

Daylight credit may be extended by central banks to even out mismatches in the settlement of payments.

In a credit transfer system with end-of-day final settlement, daylight credit is tacitly extended by a receiving institution if it accepts and acts on a payment order, even though it will not receive final funds until the end of the business day.

Also known as Daylight overdraft, Daylight credit, or Intra-day credit.

2.

Any risk arising from timing differences between the settlement of transactions during a business day.

See also

• Credit
• Payments and payment systems
• Settlement