NY Fed Comments on Reverse Repo Operations
Posted 10-19-2009 at 12:00 PM by greenfaucet.com
By Greg Michalowski, greenfaucet.com
Numerous Federal Reserve communications have indicated that reverse repurchase agreements are a tool that could be used to support a reduction in monetary accommodation at the appropriate time. Over the past year, the Federal Reserve Bank of New York has been working internally and with market participants on operational aspects of reverse repos to ensure that this tool will be ready when and if the Federal Open Market Committee decides they should be used. This work is a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary policy tightening.
Repos and reverse repos have been in the Federal Reserve's toolkit for years, and the Federal Reserve has conducted both as recently as December 2008. The focus of recent work has been to expand our existing capability to conduct reverse repos with Primary Dealers to include "triparty" settlement.1 This has involved working with the triparty clearing banks and Primary Dealers to implement the necessary changes and updates. We have recently begun testing this capability with all involved parties and systems, and it is likely that the Federal Reserve will engage in additional tests in the future. No actual operations have been conducted as part of these tests.
Recent Federal Reserve communications have also raised the possibility of expanding the set of counterparties the Desk might employ for conducting reverse repos beyond the Primary Dealers. The Federal Reserve noted that they continue to study this issue, and no decisions have been made regarding the types of firms that may be included. We will engage market participants on this subject as appropriate going forward.
Numerous Federal Reserve communications have indicated that reverse repurchase agreements are a tool that could be used to support a reduction in monetary accommodation at the appropriate time. Over the past year, the Federal Reserve Bank of New York has been working internally and with market participants on operational aspects of reverse repos to ensure that this tool will be ready when and if the Federal Open Market Committee decides they should be used. This work is a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary policy tightening.
Repos and reverse repos have been in the Federal Reserve's toolkit for years, and the Federal Reserve has conducted both as recently as December 2008. The focus of recent work has been to expand our existing capability to conduct reverse repos with Primary Dealers to include "triparty" settlement.1 This has involved working with the triparty clearing banks and Primary Dealers to implement the necessary changes and updates. We have recently begun testing this capability with all involved parties and systems, and it is likely that the Federal Reserve will engage in additional tests in the future. No actual operations have been conducted as part of these tests.
Recent Federal Reserve communications have also raised the possibility of expanding the set of counterparties the Desk might employ for conducting reverse repos beyond the Primary Dealers. The Federal Reserve noted that they continue to study this issue, and no decisions have been made regarding the types of firms that may be included. We will engage market participants on this subject as appropriate going forward.
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By establishing a stable of the most highly respected writers in the industry in a very balanced manner, we serve to keep the standards of content as high as possible. While other sites aggregate content without any regard for quality or credibility, we strive to provide users with a site offering balanced, objective, professional opinion and research while giving users the ability to interact with their favorite contributors and utilize the latest technology to get hard hitting answers to hard hitting questions.
Our users have the opportunity to sample newsletter styles to help them find a fit for their investment objectives, interests, and preferences, as we hope to create a sounding board for exceptional minds to convey their vision of the markets to an intelligent audience in a consistent manner. For all the broken clocks, one horse races, and single tune instruments, there are writers adapting, researching, and strategizing.
The former group is representative of what is wrong with many sites in existence today. The latter group represents practicality and reality.
We also strive to provide a site that not only gives the user the highest quality content and most progressive technological integration, but as well adapts to the user’s preferences and demands. In other words, greenfaucet is here to provide for the user. Who is the user? You the broker. You the fund manager. You the individual investor. You the day trader. Whoever YOU want to be.
