The Federal Reserve plans to continue its previously announced periodic testing of the Term Deposit Facility (TDF) with one operation in February. These operations are aimed at ensuring the operational readiness of the TDF and providing eligible institutions with an opportunity to maintain familiarity with term deposit procedures. The TDF test operations are a matter of prudent planning and have no implications for the near-term conduct of monetary policy. The Federal Reserve plans to conduct a similar routine TDF test operation each quarter in 2017. The schedule and terms for future test operations will be announced at later dates.
On Feb. 23, 2017, the Federal Reserve will conduct a floating-rate offering of term deposits with an early withdrawal feature through its TDF. The Federal Reserve will offer seven-day term deposits with a rate set equal to the sum of the interest rate paid on excess reserves plus a fixed spread of 1 basis point. The maximum tender amount per institution will be $1,000,000,000. The operation window will be open from 10:30 a.m. EST to 12:30 p.m. EST, and awarded deposits will settle the same day the operation is executed.
Description of Operation and Tender Parameters TDF Operation ID: F67 Operation Format: Floating-Rate Term: Seven-Day Reference Rate: Interest rate paid on excess reserves (IOER) Spread: 0.01000% Early Withdrawal Feature Included: Yes Penalty Rate for Early Withdrawal: 0.75000% Operation Date: Thursday, Feb. 23, 2017 Opening Time: 10:30 a.m. EST Closing Time: 12:30 p.m. EST Notification Date (summary results): Thursday, Feb. 23, 2017 Settlement Date: Thursday, Feb. 23, 2017 Maturity Date: Thursday, March 2, 2017 Tender Parameters Maximum Number of Tenders: 1 Minimum Tender Amount: $10,000 Tender Increment: $10,000 Maximum Tender Amount (per institution): $1,000,000,000 Award Minimum Amount: $10,000 Award Maximum Amount: $1,000,000,000 Submission of Tender Participants must submit tenders by accessing the Term Deposit Facility application between the opening time and the closing time on the operation date.
All tenders that are complete and compliant with the operation parameters listed above will be automatically awarded in full.
Early Withdrawal The penalty for obtaining a return of funds prior to the maturity date includes the forfeiture of all interest on the term deposit plus an additional fee of 0.75000 percent at an annual rate applied to the principal over the entire term of the deposit. Requests for early withdrawal must be made between 10:00 a.m. EST and 12:00 p.m. EST.
See the TDF Resource Center for additional details regarding this feature and the terms and conditions for early withdrawal (www.frbservices.org/centralbank/term_deposit_facility.html).
Notification Participants will be able to view their awards by accessing the Term Deposit Facility application.
Summary operation results will be published on the Board of Governors' website at approximately 3:30 p.m. EST on the notification date.
The operation will be conducted as specified in this announcement, Regulation D, and the terms and conditions of the Term Deposit Facility.
Additional information, including the steps that institutions must complete to be eligible to participate in term deposit operations are available at http://www.frbservices.org/centralbank/term_deposit_facility.html.
For media inquiries, call 202-452-2955.
