Operating Policy
Statement Regarding Term Reverse Repurchase Agreements
June 22, 2015

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York 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). 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 an additional supplementary tool to help control the federal funds rate. In support of this goal, on March 17, the FOMC approved a resolution authorizing the Desk to conduct a series of term RRP operations to span each quarter-end through January 29, 2016.

For the June quarter-end, the Desk previously announced its plans to offer at least $200 billion in term reverse repurchase agreement transactions that cross the quarter-end, noting that the schedule would be updated on or around June 22. These operations will be conducted in addition to the authorized overnight RRPs, which remain subject to a separate overall size limit authorized by the FOMC. The updated schedule follows:

Tentative Schedule of Term RRP Operations

operation date settlement date maturity date amount offered maximum offering rate
Thu, Jun 25, 2015 Thu, Jun 25, 2015 Thu, Jul 2, 2015 $100 billion ON RRP offering rate on Jun 25 + 3 basis points
Mon, Jun 29, 2015 Mon, Jun 29, 2015 Wed, Jul 1, 2015 $100 billion* ON RRP offering rate on Jun 29 + 3 basis points
* Any undersubscribed capacity from the June 25 term RRP will be added to the offering size of the June 29 term RRP.

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.

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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