US Federal Reserve establishes two new standing repo facilities
30 July 2021 US
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The US Federal Reserve’s open market committee has established two standing repo facilities to support the effective implementation of monetary policy and smooth market functioning.
These facilities — a domestic standing repo facility (SRF) and a repo facility for foreign and international monetary authorities (FIMA) — will serve as backstops in money markets.
Under the SRF, the Federal Reserve will conduct daily overnight repo operations against Treasury securities, agency debt securities, and agency mortgage-backed securities, with a maximum operation size of $500 billion.
The minimum bid rate for repos under the facility will be set initially at 25 basis points, somewhat above the general level of overnight interest rates.
Counterparties for this facility will include primary dealers and will be expanded over time to include additional depository institutions.
Under the FIMA repo facility, the Federal Reserve will enter into overnight repurchase agreements as needed with foreign official institutions against their holdings of Treasury securities maintained in custody at the Federal Reserve Bank of New York.
By creating a temporary source of dollar liquidity for FIMA account holders, the facility aims to address pressures in global dollar funding markets that could otherwise affect financial market conditions in the US.
The rate for this facility will be set initially at 25 basis points with a per counterparty limit of $60 billion.
These facilities — a domestic standing repo facility (SRF) and a repo facility for foreign and international monetary authorities (FIMA) — will serve as backstops in money markets.
Under the SRF, the Federal Reserve will conduct daily overnight repo operations against Treasury securities, agency debt securities, and agency mortgage-backed securities, with a maximum operation size of $500 billion.
The minimum bid rate for repos under the facility will be set initially at 25 basis points, somewhat above the general level of overnight interest rates.
Counterparties for this facility will include primary dealers and will be expanded over time to include additional depository institutions.
Under the FIMA repo facility, the Federal Reserve will enter into overnight repurchase agreements as needed with foreign official institutions against their holdings of Treasury securities maintained in custody at the Federal Reserve Bank of New York.
By creating a temporary source of dollar liquidity for FIMA account holders, the facility aims to address pressures in global dollar funding markets that could otherwise affect financial market conditions in the US.
The rate for this facility will be set initially at 25 basis points with a per counterparty limit of $60 billion.
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