TO: Primary Dealers
FROM: Sandra Krieger, Federal Reserve Bank of New York
DATE: October 7, 1999
SUBJECT: Expansion of Information Announced about Open Market Operations and Final Terms for Standby Financing Facility
Expansion of Information Announced about Open Market Operations
Attached is an explanation of the information we
plan to disclose following temporary open market operations. We
will provide additional information about the volume of propositions
(i.e. the total volume of propositions submitted, in addition
to the volume of propositions accepted), as well as information
summarizing the rates received (i.e. the weighted average rate
on accepted propositions (for repos and matched-sale/reverse repo
transactions), the high and low rate submitted, and the last rate
accepted). If collateral is grouped into separate operations,
we will announce this information for each grouping of collateral.
We will begin to disclose this information tomorrow, with the
auction of 90-day repos at 8:30 a.m. Given separate pricing of
groupings of collateral in Desk operations (e.g. Treasuries, Agency
debt and mortgage-backed securities) and the heightened interest
of market participants in financing-market pricing ahead of the
turn of the year, the FRBNY has determined that it would be beneficial
to be more transparent about dealer submissions in our temporary
operations both repo and matched sales (or reverse repo)
Final Terms for the Standby Financing Facility ››
Also attached is the final term sheet for the Standby Financing Facility (SFF). The comments we received were helpful in shaping the final terms of the facility. We welcome continued dialogue as we proceed with the auctions. We expect to fax to you, on Tuesday, October 12, the legal agreements for this facility. We will need to ask for quick turn around time again, in order to be positioned to hold the first auction on October 20.
In the final term sheet for the SFF, please note that we have increased the initial auction amounts for the December 23 and January 6 strips of options to $8 billion and we have increased the initial auction size for the December 30 strip of options to $12 billion, in response to comments for initially larger auctions than proposed. Also, we have further explained the settlement process in Point 11. And, we are committing to announcing the weekly auction sizes six days ahead of each auction. We hope that this will give both dealers and their customers sufficient time to formulate their bids. Finally, given the preannouncement of auction sizes, terms, dates and times, we felt we could shorten the bidding window to fifteen minutes. This is noted in Point 6.
Again, thank you for your help in formulating our proposals for year-end operations.