Expansion of Acceptable Collateral for Discount Window and Payments System Risk Purposes
October 21, 1999
Circular No. 11195

To All Depository Institutions in the Second Federal Reserve District:

In an effort to expand the range of acceptable collateral, the Federal Reserve Banks have approved acceptability and valuation criteria for a number of new asset categories. Effective immediately, the following asset types are now acceptable for Discount Window and Payments System Risk purposes:

  • Certificates of Deposit (rated investment grade)
  • Deposit Notes (rated investment grade)
  • Commercial Paper and other debt instruments issued by banks or affiliates of banks (rated investment grade)
  • Collateralized Bond Obligations (rated AAA)
  • Collateralized Loan Obligations (rated AAA)
  • Commercial Mortgage Backed Securities (rated AAA)

The Collateral Margins Table is available as a file. It reflects the addition of these asset types and the current margins.

Looking ahead, the Federal Reserve System anticipates approving investment grade rated Foreign Denominated Sovereign Debt as Discount Window and Payments System Risk collateral. (At this time, we are still working out several operational issues.) For that change, as well as other updates, please refer to the Collateral Margins Table, or, for other information, to the central website of the Chicago Reserve Bank.

Questions regarding the acceptability of assets as collateral for Discount Window or Payments System Risk purposes should be directed, at this Bank, to Betty Griffith, Financial Analyst, Markets Group, or Gary Moorman, Financial/Economic Analyst, Credit & Risk Management.