N.Y. Fed To Test Triparty Reverse Repurchases

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The New York Federal Reserve announced Monday that it will begin to test triparty reverse repurchase agreements in the coming weeks.

The New York central bank had previously released a statement in October, saying that it was working internally and with market participants to ensure that reverse repos could be used as effective tool to reduce the Fed's accommodative monetary policies when it becomes appropriate to do so.

Reverse Repurchases - which include an agreement to buy a security and sell it later at a high price - have been used by the Federal Reserve for years, but the central bank now wants agreements to include triparty settlement.

As part of the tests, the N.Y. Fed will conduct "small-scale, real-value transactions" with primary dealers, and results of the tests will be posted on the N.Y. Fed's website.

The N.Y. central bank was careful to point out, however, that the tests are not indicative of a change in stance on monetary policy or any changes in policy in the near future.

"These forthcoming operations are being conducted to ensure operational readiness at the Federal Reserve, the triparty repo clearing banks, and the primary dealers," the N.Y. Fed said in a statement. "The operations have been designed to have no material impact on the availability of reserves or on market rates."

The New York Federal Reserve announced Monday that it will begin to test triparty reverse repurchase agreements in the coming weeks. The New York central bank had previously released a statement in October that it was working internally and with market participants to ensure that reverse repos could be used as effective tool to reduce the Feds accommodative monetary policies when it becomes appropriate to do so. (Market News Provided by RTTNews)