March 12, 2020

The New York Fed Announced A New Repo Program. What Does That Mean?

The repurchase agreement, or “repo,” market is an obscure but important part of the financial system that has drawn increasing attention lately. On average, $2 trillion to $4 trillion in repurchase agreements – collateralized short-term loans – are traded each day. But how does the market for repurchase agreements actually work, and what’s going on with it?

A repurchase agreement (repo) is a short-term secured loan: one party sells securities to another and agrees to repurchase those securities later at a higher price. The securities serve as collateral. The difference between the securities’ initial price and their repurchase price is the interest paid on the loan, known as the repo rate.

The New York Fed increased the size of its repurchasing operations today in order to address the “highly unusual” disruptions in Treasurys markets. It said it would offer $500 billion in a three-month repo operation both today and tomorrow. It also said it would offer $500 billion in a one-month repo operation tomorrow. The New York Fed added it would conduct one-month and three-month operations for $500 billion every week for the remainder of the month. This is on top of at least $175 billion in daily overnight repo operations. As part of the repo operations, the Fed will temporarily lend out funds to broker-dealers in return for collateral such as Treasurys and mortgage-backed securities. The Fed’s interventions comes as market participants have worried about the difficult of trading Treasurys in the last few days.

Grab a free day pass to one of our live signal trading rooms today>> http://bit.ly/nlonedaypass

Follow me on Twitter @MikeShorrCbot

about the author:

Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

Read Similar Articles

https://www.prospertrading.com/mike-shorr-live-qa-091826/Live Q&A with Mike Shorr: Allocation, Risk Management, and More
September 22, 2026

Live Q&A with Mike Shorr: Allocation, Risk Management, and More

Mike Shorr answers live trading room questions on triple witching, proper position allocation, and a faster ThinkorSwim trade execution setup.

Read Article
https://www.prospertrading.com/scott-bauer-ikbr-091626/The Fed Rate Hike: What Investors Should Know
September 18, 2026

The Fed Rate Hike: What Investors Should Know

Scott Bauer joins the IBKR Podcast to break down what matters most after the Fed’s latest hike, from Warsh’s tone to housing data and the October hike probability.

Read Article
https://www.prospertrading.com/charlie-moon-qa-082726/Charlie Moon’s Day Trading Playbook
August 28, 2026

Charlie Moon’s Day Trading Playbook

Charlie Moon went live with his trading room to walk through the exact playbook he uses every single day. This is an inside look at how he reads the market, spots his setups, and manages trades in real time.

Read Article

Read Similar Articles

July 15, 2026

The Fed, Oil, and What Earnings Season Really Means

Scott Bauer joined the IBKR Podcast this week to break down what moved markets last week and what investors need to watch heading into the next stretch of earnings season. From lagging inflation data to big tech CapEx concerns, Scott did not hold back.

Read Article
July 5, 2026

The Week Ahead: Happy 250

The Dow rose more than ​1% to a record closing high on Thursday ahead of the long holiday weekend as a softer-than-expected U.S. ‌jobs report eased worries about interest rate hikes, while another sharp drop in chipmaker stocks weighed on the Nasdaq. The second half of 2026 kicked off this week much the same as […]

Read Article
June 28, 2026

The Week Ahead: Darn Inflation

A renewed sell-off in technology stocks grabbed headlines this week. The Nasdaq index fell 4.5%, closing lower 5 days in a row, led by a large 5.5% decline in the so-called Magnificent 7 mega cap names. Meanwhile, the post IPO exuberance around SpaceX appears to be fading, with shares now down 25% from their peak. […]

Read Article