December 10, 2025
The following frequently asked questions (FAQs) provide further information about the Federal Reserve's secondary market transactions in Treasury securities.
What is the current policy directive pertaining to the Desk’s Treasury Outright Operations?
On December 10, 2025 the Federal Open Market Committee (FOMC) directed the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York (New York Fed) to increase the System Open Market Account securities holdings to maintain an ample level of reserves through purchases of Treasury bills and, if needed, other Treasury securities with remaining maturities of 3 years or less. Additionally, the FOMC directed the Desk to continue to reinvest all principal payments received from the Federal Reserve’s holdings of agency securities into Treasury bills.
For more information on the December 10, 2025 directive, see: https://www.newyorkfed.org/markets/opolicy/operating_policy_251210a
How will the Desk determine the monthly amount of secondary market Treasury purchases?
As instructed by the FOMC, the monthly amount of secondary market purchases in Treasuries will consist of reserve management purchases (RMPs) to grow the SOMA portfolio in order to maintain ample reserve conditions and reinvestment of proceeds from principal payments of agency securities.
RMPs will be sized to accommodate seasonal fluctuations in demand for Federal Reserve liabilities, such as those driven by tax payment dates, as well as trend growth in demand over longer horizons. In order to ensure that reserves remain ample, purchases may be increased in anticipation of projected troughs in reserves; purchases may then be reduced during periods of lower demand for Fed liabilities. Monthly reinvestment of agency securities will consist of monthly principal payments of agency debt, agency mortgage-backed securities (MBS) and agency commercial mortgage-backed securities (CMBS) holdings. Reinvestment of agency debt and MBS holdings will be based on anticipated principal paydowns in the current month while reinvestment of agency CMBS holdings will be based on actual principal paydowns from the prior month.
The Desk will publish the monthly amount of secondary market Treasury purchases on or around the ninth business day of that month alongside a tentative monthly schedule of operations expected to take place between the middle of the month and the middle of the following month that communicates the operation dates, times, security types, maturities, and maximum transaction amounts.
In what Treasury securities will the Desk operate?
Consistent with the FOMC directive, the Desk will allocate reinvestment of proceeds from agency securities into Treasury bills. RMPs generally will also be directed towards bills; however, depending on market conditions, the Desk may allocate some or all of these purchases into other Treasury securities with remaining maturities of 3 years or less.
When purchasing bills, the Desk will split bill purchases across two sectors based on the proportional par amount of bills outstanding in each sector, using the 12-month average as of September 2025. The table below shows the specific sectors the Desk will use and approximate sector weights. The sector weights are subject to change and will be re-evaluated periodically.
| BILLS | ||
| SECTOR | 1-4 months | 4-12 months |
| SECTOR WEIGHT | 75% | 25% |
If market conditions dictate that some or all of RMPs be directed into Treasury coupon securities with remaining maturities of 3 years or less, the Desk will split these purchases across two Treasury coupon sectors based on the proportional par amount of coupons outstanding in each sector, using the 12-month average as of September 2025. The table below includes the specific sectors the Desk will use and approximate sector weights. The sector weights are subject to change and will be re-evaluated periodically.
| COUPONS | ||
| SECTOR | 1 month-1.5 years | 1.5 years-3.0 years |
| SECTOR WEIGHT | 50% | 50% |
The Desk’s monthly purchase schedule for secondary market purchases will communicate the specific sector and maturity range of each operation in advance. The Desk anticipates transacting across the full maturity range in each sector for most operations; however, in some circumstances the Desk may not always transact in the sector’s full maturity range for market functioning and operational efficiency reasons. The Desk will refrain from purchasing securities that are trading with heightened scarcity value in the repo market for specific collateral, securities with four weeks or less to maturity, securities trading in the when-issued market, securities that are cheapest to deliver into active Treasury futures contracts and cash management bills. Specific issues that will be excluded from consideration will be announced at the start of each operation.
What are the limits on the SOMA holdings of any one Treasury issue?
The Desk will limit SOMA holdings to a maximum of 70 percent of the total outstanding amount of any individual Treasury security.
What are the limits on SOMA purchases of any one Treasury issue?
The Desk allows the share of SOMA holdings of an individual Treasury security to rise above certain levels only in modest increments.
For nominal coupons, TIPS, and FRNs, the Desk allows the share of SOMA holdings of an individual Treasury security to rise above 35 percent in increments, as shown below.
| Purchase Limits for Nominal Coupons, TIPS, and FRNs | ||
SOMA Security Ownership Prior to Operation as a Percentage of Outstanding |
Maximum Purchase Amount per Security in Operation is the Lesser of (A) or (B): | |
| (A) | (B) | |
| 0-30% | N/A | (35% of Outstanding) minus SOMA Holdings |
| 30%-47.5% | 5% of Outstanding | (50% of Outstanding) minus SOMA Holdings |
| 47.5%-59% | 2.5% of Outstanding | (60% of Outstanding) minus SOMA Holdings |
| 59%-70% | 1% of Outstanding | (70% of Outstanding) minus SOMA Holdings |
| Above 70% | Not Eligible for Purchase | |
For bills, the Desk allows the share of SOMA holdings of an individual Treasury security to rise above 17.5 percent in increments, as shown below.
| Purchase Limits for Bills | ||
SOMA Security Ownership Prior to Operation as a Percentage of Outstanding |
Maximum Purchase Amount per Security in Operation is the Lesser of (A) or (B): | |
| (A) | (B) | |
| 0-15% | N/A | (17.5% of Outstanding) minus SOMA Holdings |
| 15%-34% | 2.5% of Outstanding | (35% of Outstanding) minus SOMA Holdings |
| 34%-59.5% | 1% of Outstanding | (60% of Outstanding) minus SOMA Holdings |
| 59.5%-70% | 0.5% of Outstanding | (70% of Outstanding) minus SOMA Holdings |
| Above 70% | Not Eligible for Purchase | |
Does the Federal Reserve lend the Treasury securities it owns?
Yes, Treasury securities held in the SOMA are available to borrow through the SOMA securities lending program. For more information on Securities Lending, please see here.
How are SOMA holdings of Treasury securities reported?
SOMA Treasury holdings are reported on a weekly basis in the H.4.1 statistical release. Over any period, changes in the H.4.1 line item "U.S. Treasury securities" reflect the net effect of rollovers, purchases, and sales of Treasury securities, as well as movements in inflation compensation. For a full list of SOMA holdings, please see here.
Who is eligible to transact in Treasury outright operations with the Federal Reserve?
The New York Fed’s primary dealers are eligible to transact in Treasury outright operations directly with the Federal Reserve. Dealers are expected to submit bids and offers for both themselves and their customers.
How are outright operations conducted?
The Desk conducts Treasury outright operations via FedTrade, the Desk’s proprietary trading system. FedTrade operations are generally conducted using multiple-price, competitive auctions with approved counterparties. A "multiple-price" auction is an auction in which securities are awarded at the price corresponding to the participant’s bid or offer in the operation, resulting in the security being awarded at multiple prices. The minimum auction amount, bid/offer size, and bid/offer increment are each $1 million. Participants can submit up to nine bids or offers per security, with each bid or offer reflecting both a price and par amount. For Treasury bills, bids and offers will be entered as rates, whereas for FRNs, bids and offers will be entered as discount margin.
Propositions in FedTrade operations are evaluated based on their proximity to prevailing market prices at the close of the auction, as well as measures of relative value. Relative value measures are calculated using the New York Fed’s proprietary model.
How will the Desk communicate the operation results?
Operation results will be posted on the New York Fed’s website following each operation. The information posted will include the total amount of propositions received, the total amount of propositions accepted, and the amount purchased or sold per issue. In addition, participating dealers will receive the operation results, including their accepted propositions, via FedTrade, immediately following the close of the auction.
Will the Desk release operation pricing results?
The Desk will publish information on transaction prices in individual operations at mid-month for the prior monthly transaction period following periods in which the Desk conducts outright operations. For each security purchased or sold in each operation, the Desk will release the weighted-average accepted price/rate, the least favorable accepted price/rate, and the proportion accepted of each proposition submitted at the least favorable accepted price/rate.
In addition to the pricing information released each month, Section 1103 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires that detailed operational results, including counterparty names, be released two years after each quarterly transaction period.
Whom should dealers call if they experience difficulties during the operation?
Primary dealers may call the New York Fed’s Open Market Trading Desk with submission and verification questions. For system-related problems, dealers may call the New York Fed’s Primary Dealer Support.
When and how does Treasury security settlement take place?
Treasury security settlement typically occurs on a T+1 basis, i.e. one business day after the day of the operation, via the Fedwire Securities System.
Does the Federal Reserve assess the TMPG Treasury fails charge?
Yes. The failure of the Federal Reserve's counterparties to deliver Treasury securities for the contractual settlement date of the Desk's trades has resulted in the Federal Reserve assessing the applicable Treasury fails charge recommended by the Treasury Market Practices Group (TMPG). Additional information can be found here.
