Operating Policy
Statement Regarding Term Reverse Repurchase Agreements
February 5, 2015

As noted in the January 28, 2015, Statement Regarding Term 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 to conduct a series of term RRP operations from mid-February through early March. These tests are intended to help the Desk examine how term RRP operations might work as an additional supplementary tool to help control the federal funds rate.

The tests will consist of four one-week term RRP operations to take place on successive Thursdays, beginning with a $10 billion operation on February 12. The amount offered and maximum offering rate associated with each subsequent operation will be announced on or around the Monday prior to the operation. A tentative schedule follows:

Tentative Schedule of Term RRP Operations

operation date settlement date maturity date amount offered maximum offering rate
Thu, Feb 12, 2015 Thu, Feb 12, 2015 Thu, Feb 19, 2015 $10 billion ON RRP maximum offering rate on Feb 12 + 5 basis points
Thu, Feb 19, 2015 Thu, Feb 19, 2015 Thu, Feb 26, 2015 TBA* TBA**
Thu, Feb 26, 2015 Thu, Feb 26, 2015 Thu, Mar 5, 2015 TBA* TBA**
Thu, Mar 5, 2015 Thu, Mar 5, 2015 Thu, Mar 12, 2015 TBA* TBA**
* The amount offered at any given operation will be $50 billion or less.
** The maximum offering rate at any given operation will be less than or equal to the ON RRP offering rate in effect on the day of the operation plus 5 basis points.

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 “stop-out” rate at which the amount offered is reached, with all bids below this rate awarded in full at the stop-out rate and all bids at this rate awarded on a pro rata basis at the stop-out rate. The stop-out 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. Undersubscribed auctions will be awarded at the highest rate submitted by any bidder.

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