Dollar-Weighted Average Day of Clearance Law and Legal Definition
According to 31 CFR 205.2 [Title 31 -- Money and Finance: Treasury; Subtitle B -- Regulations Relating to Money and Finance; Chapter II -- Fiscal Service, Department of the Treasury; Subchapter A -- Financial Management Service Part 205 -- Rules and Procedures for Efficient Federal-State Funds Transfers], Dollar-Weighted Average Day of Clearance means “the day when, on a cumulative basis, 50 percent of funds have been paid out. To calculate the dollar-weighted average day of clearance for a clearance pattern:
(1) For each day, multiply the percentage of dollars paid out that day by the number of days that have elapsed since the payments were issued. For example, on the first day payments were issued, multiply the percentage of dollars paid out on that day by zero, since zero days have elapsed. On the day after payments were issued, multiply the percentage of dollars paid out on that day by one, since one day has elapsed; and so forth.
(2) Total the results from paragraph (1) of this definition. Round to the nearest whole number. This is the dollar-weighted average day of clearance.”
