Effective Monday, December 23, 2013, the Federal Reserve Bank of New York (FRBNY) revised the terms of its daily, overnight fixed-rate reverse repurchase operational exercise, to increase the maximum allotment cap from $1 billion per counterparty per day to $3 billion per counterparty per day. In addition, the fixed rate for the operations will be lowered from 5 basis points to 3 basis points. All other terms of the exercise will remain the same.
Since 2009, the Open Market Trading Desk (the Desk) of the FRBNY has been working with market participants on operational aspects of tri-party reverse repurchase agreements (RRPs) to ensure that this tool will be ready to support the monetary policy objectives of the Federal Open Market Committee (Committee). In September, the Committee instructed the Desk to further examine how a potential overnight, fixed-rate full-allotment RRP facility might affect short-term interest rates. As a result, the Desk will conduct a series of daily overnight, fixed-rate RRP operations through the end of January 2014. The operations will remain open to all eligible RRP counterparties, will use Treasury collateral, will settle same-day, and will have an overnight tenor.
You can find the press release announcing these changes here.
Good Exercise. Good Year. TSR
This article is presented for informational purposes only and is not intended to constitute legal advice.
