NEW YORK (MNI) – The following is the text of a statement by the
New York Federal Reserve Bank Tuesday announcing its intentions to
conduct a series of reverse repurchase transactions starting Wednesday,
October 13:

As noted in the October 19, 2009, Statement Regarding Reverse
Repurchase Agreements, the Federal Reserve Bank of New York has been
working internally and with market participants on operational aspects
of triparty reverse repurchase agreements to ensure that this tool will
be ready if the Federal Open Market Committee decides it should be used.
In the August 3, 2010, statement, the New York Fed announced a series of
small-scale, real-value transactions with primary dealers using U.S.
Treasury securities, direct agency debt, and agency mortgage-backed
securities (MBS) as collateral.

Beginning tomorrow, the New York Fed intends to conduct another
series of small-scale, real-value reverse repurchase transactions using
all eligible collateral types. The first set of operations will be
conducted using only the expanded repo counterparties announced on
August 18, 2010. The second set of operations will be open to all
eligible reverse repo counterparties.

Like the earlier operational readiness exercises, this work is a
matter of prudent advance planning by the Federal Reserve. The
operations have been designed to have no material impact on the
availability of reserves or on market rates. Specifically, the aggregate
amount of outstanding transactions will be very small relative to the
level of excess reserves, and the transactions will be conducted at
current market rates. These operations do not represent a change in the
stance of monetary policy, and no inference should be drawn about the
timing of any change in the stance of monetary policy in the future.

The results of these operations will be posted on the public
website of the Federal Reserve Bank of New York, together with the
results for other temporary open market operations. The outstanding
amounts of reverse repos are reported as a factor absorbing reserves in
Table 1 in the Federal Reserve’s H.4.1 statistical release, and as
liability items in Tables 9 and 10 of that release.

** Market News International New York Bureau: 212-669-6430 **

[TOPICS: M$U$$$,MMUFE$,MK$$$$]