Traders Resist New York Fed Loan Facility, Fed's Repurchase Market Pressure Relief Hindered

BlockBeats News, November 19th. According to foreign media reports, traders have rejected the New York Fed's proposal to use a lending tool to ease market stress. Bond traders have shown resistance to Federal Reserve officials' urging to use a key lending tool, making the Fed's efforts to alleviate pressure in the $12 trillion repurchase market more complicated.

Sources familiar with the matter revealed that last week, at a meeting, major trading firms representing Wall Street banks expressed to officials that there is still a stigma risk in borrowing directly from the central bank, which could be seen as a signal of trouble. This is also one of the reasons they are unwilling to use the Standing Repo Facility (SRF). Others pointed out operational and balance sheet restrictions that make accessing the tool challenging.