Primary Dealer Credit Facility: Program Terms and Conditions

The Federal Reserve Primary Dealer Credit Facility (PDCF) is an overnight loan facility that provides funding to primary dealers in exchange for a specified range of eligible collateral in accordance with the program terms and conditions. All terms and conditions are subject to change.

Effective February 3, 2009
CURRENT TERMS AND CONDITIONS

PDCF Loans
Primary dealers may secure loans under the PDCF with all collateral eligible for pledge in triparty funding arrangements through the major clearing banks as of September 12, 2008.

Borrower Eligibility
Only primary dealers of the New York Fed are eligible to participate in the PDCF via their clearing banks.

Overnight Lending
Loans will settle on the same business day and will mature the following business day.

Eligible Collateral
Collateral eligible for pledge under the PDCF includes all collateral eligible for pledge in tri-party funding arrangements through the major clearing banks as of September 12, 2008.

Rate
The rate of the loan is the primary credit rate at the New York Fed. Click here for current rates.

Frequency-Based Fee
The frequency-based fee is a fee schedule that will specify additional fees to be charged to dealers who access the facility on more than 45 business days. Access to the facility on the 46th and subsequent days will result in additional fees to be paid by the dealer. The exact frequency-based fee schedule was determined in consultation with the primary dealers and was announced shortly after the program was put in place.

Custody Rules and Arrangement
Dealers will communicate their demand for funding to their clearing banks. The clearing bank will verify that a sufficient amount of eligible collateral has been pledged by each primary dealer participating in the PDCF and notify the New York Fed accordingly. Once the New York Fed receives notice that a sufficient amount of margin-adjusted eligible collateral has been assigned to the New York Fed’s account, the New York Fed will transfer the amount of the loan to the clearing bank for credit to the primary dealer.

Collateral Valuation
The pledged collateral will be valued by the clearing banks based on a range of pricing services.

Loan Size
Loans will be limited to the amount of margin-adjusted eligible collateral pledged by the dealer and assigned to the New York Fed’s account at the clearing bank.

Recourse
Loans made under the PDCF are made with recourse beyond the pledged collateral to the primary dealer entity itself.

Program Termination
The PDCF will remain available to primary dealers until October 30, 2009 or longer if conditions warrant.

Program Terms and Conditions: December 8, 2008 ››