Final answer:
The Federal Reserve pays custodians on the Friday prior to the pay date when an income payment date falls on a month-end weekend, to ensure timely access to funds.
Step-by-step explanation:
When an income payment date falls on a month-end weekend, the Federal Reserve typically pays custodians on the Friday prior to the pay date. This practice helps ensure that there is no delay in the receipt of funds due to non-business days. Custodians are entities that hold securities and other assets in electronic or physical form on behalf of others. By paying on the Friday before a weekend or holiday, the Federal Reserve ensures that recipients have access to their funds in a timely manner. This is in line with standard financial industry practices, where transactions are settled on the last business day before a weekend or holiday if the specified payment date falls on a non-business day