New York Fed Revises Policy for Primary Dealers

The Federal Reserve Bank of New York ("New York Fed") revised its operating policy regarding primary dealers. The policy sets standards that both prospective and current primary dealers are required to meet in order to maintain a trading counterparty relationship with the Federal Reserve Bank. Standards relate to the market participation and market making capacity of the primary dealer, among other considerations.

This revision includes new geographic dispersion standards and a few minor clarifications to the policy. The new geographic dispersion standards require primary dealers to employ geographic dispersion between their primary and secondary locations to allow participation in desk operations even amid wide-scale disruptions. Primary dealers will be expected to meet these new standards after a transition period.

Firms wishing to become a primary dealer must submit an application to the New York Fed. Prior to submitting a written application, firms considering whether to apply to become a primary dealer are encouraged to discuss the possibility with relevant New York Fed staff. Inquiries should be directed to: [email protected]. Upon submission of a formal application, a prospective primary dealer can expect at least six months of formal consideration by the New York Fed.