Series 52: 7.4.3.2. Open Market Trading Desk

7.4.3.2. Open Market Trading Desk

The FOMC regulates the federal funds rate by conducting its open market operations to influence the supply of bank reserves. It purchases and sells government securities, such as those issued by the U.S. Treasury, federal agencies, and government-sponsored enterprises. Open market operations are carried out by the Open Market Trading Desk of the Federal Reserve Bank of New York.

The Trading Desk is run by the manager of the System Open Market Account (SOMA) at the Federal Reserve Bank of New York. After each policy meeting, the FOMC issues a directive to the manager of the System Open Market Account, outlining the policy it considers appropriate for the time period between its meetings. The directive contains the rate at which the FOMC would like federal funds to trade over the intervening period.

The Open Market Trading Desk then conducts open market operations with its primary dealers. Primary dealers are very large brokerage firms and investment banks that have won an exclusive right to trade