Operating Policy
Statement Regarding Reverse Repurchase Agreements
October 29, 2014

As noted in the October 19, 2009 Statement Regarding Reverse Repurchase Agreements, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York (New York Fed) has been working internally and with market participants on operational aspects of tri-party reverse repurchase agreements (RRPs) to ensure that this tool will be ready to support the monetary policy objectives of the Federal Open Market Committee (FOMC). 

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.

Revision to Terms of Overnight RRP Operational Exercise

The New York Fed has been conducting daily, overnight RRP operations as part of an operational readiness exercise.  Pursuant to an authorization from the FOMC to modify the offering rate of these operations, the Desk intends to adjust the offering rate as follows:


Date Operation Conducted Offering Rate
October 30 to October 31
5 basis points
November 3 to November 14
3 basis points
November 17 to November 28
7 basis points
December 1 to December 12
10 basis points
December 15 and after
5 basis points

All other terms of the exercise will remain the same.  Any future changes to these operations will be announced with at least one business day’s prior notice on the New York Fed’s website.

Term RRP Operations

The Federal Reserve continues to enhance operational readiness and increase its understanding of the impact of RRPs through technical exercises. In further support of its objectives, the FOMC instructed the Desk to examine how term RRP operations might work as a supplementary tool to help control the federal funds rate, particularly when there are significant and transitory shifts in money market activity.  In support of this goal, and to reduce potential volatility in money market rates, the FOMC instructed the Desk to conduct term RRP operations that cross year-end. 

The operations will mature on or about January 2, 2015.  The operations will be open to all eligible RRP counterparties and will use Treasury collateral.  The Desk intends to offer the operations via auction at various times in December.  No more than $300 billion in term RRP transactions will be outstanding at any given time.  This limit is in addition to the limit on overnight reverse repurchase agreements, which remain subject to a separate overall size limit of $300 billion per day.

The Desk will release further information about these term RRP operations by early December.

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