NEW YORK, Feb 20 (Reuters) - The Federal Reserve will buy bonds from a larger group of broker-dealers under a one-year pilot program meant to strengthen the U.S. central bank’s direct involvement in financial markets.
The Federal Reserve Bank of New York, which carries out the central bank’s monthly purchase of $85 billion in Treasury and mortgage bonds, now does direct business with 21 so-called primary dealers such as JPMorgan Chase & Co and UBS AG .
Under the pilot, the New York Fed said it will expand that list by up to five more firms so that smaller dealers can compete for the business, and so that it can augment “operational capacity and resiliency in its monetary policy operations.”
The Fed bank outlined requirements for new broker dealers and invited them to apply to participate in the pilot. It plans to announce the names later this year.