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NY Fed To Include Agency MBS as Collateral for Repo Transactions


August 3, 2010

The Federal Reserve Bank of New York will include agency MBS in its System Open Market Account (SOMA) portfolio as eligible collateral for real-value repurchase transactions effective tomorrow, the Fed announced today.

The New York Fed currently maintains agency MBS as a custodian, in contrast to its U.S. Treasury and direct agency debt securities, which are held in one account. For this reason, certain operational and legal provisions for transactions involving agency MBS collateral differ from those with respect to Treasurys or direct agency debt.

The New York Fed stated that the new inclusion does not indicate a shift in monetary policy and has not been designed to impact the availability of reserves or market rates.


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