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A Closer Look at the Federal Reserve’s Securities Lending Program

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Abstract

The Federal Reserve lends specific Treasury and agency debt securities held in its System Open Market Account (SOMA)—and accepts general Treasury securities as collateral—through its daily securities lending program. The program supports Treasury and agency debt market function by providing a secondary and temporary source of securities to the broader market through the Fed’s trading counterparties, the primary dealers. Importantly, the size and composition of the SOMA portfolio reflect past monetary policy decisions, limiting the program's ability to help alleviate all collateral shortages. In this post, we provide a brief history of the Fed’s securities lending program and describe recent trends in activity and what is driving them.

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  • Michael J. Fleming & Frank M. Keane & Jake Schurmeier & Emma Weiss, 2016. "A Closer Look at the Federal Reserve’s Securities Lending Program," Liberty Street Economics 20160817, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:87149
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    Keywords

    Federal Reserve; Securities Lending; Treasury securities;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets

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