Operating Policy
Statement Regarding Repurchase Agreements
August 2, 2012

In November 2009, the Federal Open Market Committee (FOMC) authorized the New York Fed to undertake reverse repurchase transactions (reverse repos) for the purpose of testing operational readiness. The New York Fed has undertaken several such transactions, each one announced on the Markets section of the Bank’s website.

At its meeting in June 2012, the FOMC amended the Authorization for Domestic Open Market Operations to authorize the New York Fed to undertake certain open market transactions—outright purchase and sale of securities, and repos, in addition to reverse repos—for the purpose of testing operational readiness.

As such, beginning Friday, August 3, the New York Fed intends to conduct a series of small-value repos using all eligible collateral types.  The repos will be conducted only with the primary dealers.  The New York Fed has not conducted a repo since December 30, 2008.  Since that time, there have been several system changes, changes to support triparty reform and six primary dealers have been added.

Like the earlier reverse repo operational readiness exercises, this work is a matter of prudent advance planning by the Federal Reserve. The operations have been designed to have no material impact on the availability of reserves or on market rates. Specifically, the aggregate amount of outstanding repo transactions will be very small relative to the level of excess reserves, and the transactions will be conducted at current market rates.

These operations do not represent a change in the stance of monetary policy, and no inference should be drawn about the timing of any change in the stance of monetary policy in the future.

The results of these operations will be posted on the public website of the Federal Reserve Bank of New York, together with the results for other temporary open market operations. The outstanding amount of repo is reported as a factor supplying reserves in Table 1 in the Federal Reserve's H.4.1 statistical release and as asset items in Tables 8 and 9 of that release.
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