Operating Policy
Statement Regarding Term Reverse Repurchase Agreements
November 18, 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, 2015, 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.

The Desk plans to offer $300 billion in term RRPs that cross the year-end date. 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. A tentative schedule of the term operations spanning the year-end follows below. This schedule will be updated on or around December 17 with additional information, including the amounts offered and the maximum offering rates.

Tentative Schedule of Term RRP Operations

OPERATION DATE* SETTLEMENT DATE MATURITY DATE AMOUNT OFFERED MAXIMUM OFFERING RATE
Fri, Dec 18, 2015 Fri, Dec 18, 2015 Mon, Jan 4, 2016 To be announced To be announced
Wed, Dec 23, 2015 Wed, Dec 23, 2015 Mon, Jan 4, 2016 To be announced To be announced
Wed, Dec 30, 2015 Wed, Dec 30, 2015 Tue, Jan 5, 2016 To be announced** To be announced
*The overnight RRP operation on each of these days will be conducted at the usual time of 12:45 p.m. to 1:15 p.m. (ET).
**Any undersubscribed capacity from either of the December 18 and December 23 term RRP operations will be added to the offering size of the December 30 term RRP operation.

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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