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NY Fed Broadens Counterparty Eligibility For Reverse Repo Facility


NY Fed issues a statement easing eligibility requirements for Money Market Funds and GSEs to participate in the reverse repo facility:

  • "For SEC registered 2a-7 funds, the existing requirement to have, for the past six months, either net assets of at least $5bn or an average outstanding amount of RRP transactions of at least $1bn is reduced to $2bn and $500mn, respectively."
  • "For government sponsored enterprises, the existing requirement to have either an average daily outstanding amount of RRP transactions of no less than $1bn for the past three months, or an average daily amount outstanding of overnight money market transactions of no less than $100mn over the past three months, is removed."
  • This move is in line w NY Fed's SOMA manager Logan's speech of Apr 15 which addressed the need to adjust the RRP facility to "support effective policy implementation" (i.e. ensure it maintained a floor for the Fed funds rate): "The Desk is planning in coming months to relax certain eligibility criteria that MMFs and GSEs, in particular, must meet in order to be eligible as ON RRP facility counterparties. These changes could reduce barriers to entry in the industry for smaller MMFs and promote a more fair and inclusive marketplace."

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