Operating Policy
Statement Regarding Term Reverse Repurchase Agreements
March 2, 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 that span the March 2015 quarter-end. 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 two term RRP operations: a $75 billion, 14-day operation on March 19 and a $125 billion, 7-day operation on March 30, with any unused capacity from the March 19 operation to be added to the offering size of the March 30 operation. A tentative schedule follows:


Tentative Schedule of Term RRP Operations over March Quarter-End

operation date settlement date maturity date amount offered maximum offering rate
Thu, Mar 19, 2015 Thu, Mar 19, 2015 Thu, Apr 2, 2015 $75 billion ON RRP offering rate on Mar 19 + 5 basis points
Mon, Mar 30, 2015 Mon, Mar 30, 2015 Mon, Apr 6, 2015 $125 billion* ON RRP offering rate on Mar 30 + 5 basis points
* Any undersubscribed capacity from the March 19 term RRP will be added to the offering size of the March 30 term RRP.

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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