Fed Says Dealer Financing Terms Little Changed, Demand Rising

Wall Street dealers are paying more attention to the management of concentrated exposures to central counterparties, a Federal Reserve survey showed today.

About two-thirds of dealers indicated they had increased the amount of resources devoted to management of concentrated credit exposure in the three months through November, the same trend seen in previous surveys. While funding terms were little changed, the survey showed an “evident” uptick in demand for financing.

“For all client types, a greater share of dealers indicated having frequent or at least some discussion with clients regarding prospective transactions involving collateral transformation,” according to the Fed Senior Credit Officer Opinion Survey on Dealer Financing Terms released today. Almost one-third of dealers reported increased demand for funding of agency residential mortgage-backed securities, the Fed said.

The 22 institutions surveyed, who aren’t identified, account for “almost all of the dealer financing of dollar- denominated securities for nondealers and are the most active intermediaries” in over-the-counter derivatives markets, the Fed said. The survey was conducted from Nov. 13 to Nov. 26.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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