JP Morgan and RBC added as eligible sellers to the Fed

Dan Barnes

The Federal Reserve Bank of New York funded Secondary Market Corporate Credit Facility (SMCCF) added JP Morgan and RBC as eligible sellers of securities as of 22 May. The SMCCF is a special purpose vehicle (SPV) established to support credit to large employers by providing liquidity for qualifying corporate bonds in the secondary market and qualifying ETFs.

The SMCCF can buy eligible corporate bonds and US-listed ETFs whose investment objective is to provide broad exposure to the market for U.S. corporate bonds. Such corporate bonds and ETFs must meet the eligibility criteria specified in the SMCCF term sheet. It began buying exchange-traded funds (ETFs) on 12 May, initially without Citi or JP Morgan, two of the largest global bond dealers.

The Department of the Treasury will make a $75 billion equity investment in the SPV established by the Federal Reserve for this facility and the Primary Market Corporate Credit Facility. The SMCCF was established by the Federal Reserve under the authority of Section 13(3) of the Federal Reserve Act, with approval of the Treasury Secretary.

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