Traders resist the New York Fed's loan facility, obstructing the Fed's efforts to ease pressures in the repo market.

On November 19, according to foreign media reports, traders rejected the New York Fed's proposal to use lending tools to ease market tensions. Bond traders resisted the Fed officials' urging to use key lending tools, complicating the Fed's efforts to alleviate pressure in the $12 trillion repo market. According to informed sources, last week at a meeting, major traders representing Wall Street banks told officials that there is still a certain stigma attached to borrowing directly from the Central Bank, which could be seen as a signal of trouble. This is also one of the reasons they are reluctant to use the Standing Repo Facility (SRF). Others pointed out operational and balance sheet restrictions that make access to the tool difficult.