|The following frequently asked questions (FAQs) provide further information about the Federal Reserve's additional asset purchases of agency mortgage-backed securities (MBS) and the reinvestment of principal payments from agency securities.
Effective April 1, 2014
Why is the Desk purchasing agency MBS?
For more information on Treasury purchases, please see Frequently Asked Questions for purchases of Longer-term Treasury Securities.What types of agency MBS will the Desk purchase?
Agency MBS purchases will likely be concentrated in newly-issued agency MBS in the To-Be-Announced (TBA) market because these securities have greater liquidity and are closely tied to primary mortgage rates. The Desk may purchase other agency MBS if market conditions warrant. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for purchase. These eligible assets include, but are not limited to, 30-year and 15-year securities of these issuers. Ineligible assets include CMOs, REMICs, Trust IOs/Trust POs and other mortgage derivatives or cash equivalents.
What explains changes in the total current face value of agency MBS held in the SOMA?
How much will the Desk purchase each month in agency MBS associated with the additional asset purchases and how will this be communicated?
How much will the Desk purchase each month in agency MBS associated with the reinvestment program and how will this be communicated?
How would a change in the FOMC directive be reflected in the published purchase amounts?
Will the Federal Reserve conduct agency MBS dollar rolls or coupon swaps?
Would agency MBS dollar roll or coupon swap transactions reduce the amount of total outright agency MBS purchases?
Does the Federal Reserve assess the TMPG agency MBS fails charge?
Will principal payments from other Federal Reserve holdings, such as those held in the Maiden Lane portfolios, be reinvested in agency MBS?
How will transactions of agency MBS affect the New York Fed's aggregation of agency MBS CUSIPs in the SOMA portfolio announced in January 2011?
Who is eligible to transact in agency MBS with the Federal Reserve?
How will agency MBS transactions be conducted?
FedTrade operations will be conducted using multiple-price competitive auctions, with each primary dealer able to submit up to ten offers on each security in an operation. Offers in FedTrade operations will be evaluated based on their proximity to prevailing market prices at the auction close. Transactions conducted over Tradeweb will continue to be executed through a competitive bidding process and in line with standard market practices.
What is a "multiple-price" auction?
How often will purchases take place?
How will the tentative schedule of FedTrade operations be communicated?
What is the minimum offer amount per security that a dealer may submit over FedTrade?
How many offers per security can a dealer submit during a purchase operation over FedTrade?
Whom should dealers call if they experience difficulties during a FedTrade operation?
Under what circumstances may the Federal Reserve conduct agency MBS dollar rolls?
Under what circumstances may the Federal Reserve conduct agency MBS coupon swaps?
Will the Federal Reserve use investment managers, or other vendors, to conduct agency MBS transactions?
How will the Desk communicate the FedTrade operation results?
How will the Desk communicate all agency MBS transaction details?
How are the Federal Reserve's holdings of agency MBS reported?
Will the Desk release operation pricing results?