Operating Policy
Statement Regarding Term Reverse Repurchase Agreements
December 1, 2014

As noted in the October 29, 2014, Statement Regarding Reverse Repurchase Agreements, the Federal Open Market Committee (FOMC) instructed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York (New York Fed) 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 up to $300 billion in term RRP operations that cross year-end. This statement provides further detail on these operations.

These operations are planned to be held each Monday from December 8 through December 29 as follows:

Tentative Schedule of Term RRP Operations

Operation Date Settlement Date Maturity Date Amount Offered
Mon, Dec 8, 2014 Mon, Dec 8, 2014 Mon, Jan 5, 2015 $50 billion
Mon, Dec 15, 2014 Mon, Dec 15, 2014 Mon, Jan 5, 2015 $50 billion*
Mon, Dec 22, 2014 Mon, Dec 22, 2014 Mon, Jan 5, 2015 $100 billion*
Mon, Dec 29, 2014 Mon, Dec 29, 2014 Mon, Jan 5, 2015 $100 billion*
* The Desk plans to adjust the amount being offered to be equal to the stated amount plus any amount offered at the prior operation that goes unawarded.

Each of these operations will be conducted from 9:30 a.m. to 10:00 a.m. (ET), and each bidder will be limited to two bids per operation. Each bid will be subject to a maximum size equal to the total amount offered in a given operation. If the sum of the bids received is greater than the overall size limit, awards will be allocated using a single-price auction based on the “stopout” rate at which the amount offered is reached, with all bids below this rate awarded in full at the stopout rate and all bids at this rate awarded on a pro rata basis at the stopout rate. The stopout rate will be determined by evaluating all bids in ascending order by submitted rate up to the point at which the total quantity of offers equals the total amount offered. The maximum bid rate will be set at 0.10 percent (ten basis points), and undersubscribed auctions will be awarded at the highest rate submitted by any bidder.

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