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Floating-Rate Operation Step-by-Step Guide

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Reserves Central Term Deposit Facility. Central Bank Central (service mark)

Term Deposit Facility (TDF). Follow this step-by-step guide to learn more about floating-rate operations in the TDF application. February 2014.

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Floating-Rate Operation Timeline

Announcement: Prior to each operation, the Federal Reserve will make an announcement and post the operation details to the Board of Governors’ website.

Submit Tender: On the operation date, after the open time, and prior to the close time, the TDF participant can submit a tender using the TDF application.

View Results: All tenders that are complete and compliant with the operation parameters will be accepted in full. After the notification date and time, the aggregate results of the TDF operation will be announced on the Board of Governors’ website.

Settlement: On the settlement date, the TDF participant’s settlement account will be debited for its accepted tender amount. The TDF participant now holds a term deposit.

Maturity: On the maturity date, the TDF participant’s settlement account will be credited with principal from the term deposit and the interest earned. The TDF participant can view interest earned and historical information on its holdings of term deposits in the TDF application. The interest rate paid on term deposits awarded through a floating-rate format will be the operation effective interest rate, which is determined by the average of the daily effective rates over the term of the instrument. The daily effective rate is the sum of the value of the reference rate for that day and the spread rate for the operation.

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TDF Resource Center

To access the TDF application, click on the button on the Term Deposit Facility Resource Center page labeled “Term Deposit Facility Secure Logon”.

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Participant Home Page

Example: No Operations are available. When no operations are available, a message will appear to the participant that reads, “Open Offerings: There are no open Term Deposit Facilities at this time.”

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Submit Tender

Step 1: If an operation is available that you want to participate in, click the “Submit an Order” button that is found at the bottom of the descriptive information of the Open Offerings.

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Submit Tender

Step 2: The floating interest rate for the operation is found at the top of the screen below the Operation ID. The floating interest rate equals the reference rate plus the spread rate from the announcement document. Enter an amount into the row that appears to the right of “Amount”.

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Submit Tender

Step 3: Click on the “Submit Order” button to submit the tender.

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Submit Tender

Step 4: The following message appears: “Are you sure you want to create this order?” Click on the “OK” button to submit the tender. Note: If a participant settles term deposits through a correspondent, it should inform the correspondent of its submitted tender.

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Submit Tender

The participant receives confirmation within the Term Deposit Facility application that a tender has been successfully submitted. A submission number is assigned to the tender for an operation. For example, the message reads, “Submission #6492 for Offering 2946 has been successfully submitted”. The status is “Accepted” showing that the tender was accepted for this TDF operation. The accepted tender amount is displayed under the participant’s Deposit Amount. The participant can click on the “Modify My Order” button to change or delete its tender prior to the close time indicated for the operation.

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View Results: Close Time

Prior to maturity, information regarding tenders (including status of Accepted or Deleted) is displayed on the “Current” tab. The participant’s Deposit Amount is displayed. The Interest Rate will be displayed as “TBD” (To Be Determined) until settlement day. At the close time, a tender with a status of “Accepted” is considered an awarded term deposit for this TDF operation.

Step 5: Click on the link (for example “F2946”) below the “Offering ID” column heading to view the details of the awarded tender.

If a participant settles term deposits through a correspondent, it should inform the correspondent of its deposit amount.

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View Results: Close Time

In the example, the participant has submitted an order of $25,000,000,000 at the floating-rate operation with IOER as the reference rate and a spread rate of 0.01000%.

This screen confirms the details of your term deposit for this operation.

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Settlement

On the settlement date and until maturity, the Interest Rate field will display the current average of the daily effective rates to date. Click on its hyperlink to see daily effective rates. The daily effective rate is the sum of the value of the reference rate for that day and the spread rate for the operation.

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Maturity

Step 6: After the term deposit matures, click on the “Matured” tab to view information on matured term deposits and interest earned.

At maturity, the rate, which is hyperlinked, in the Interest Rate column represents the operation effective interest rate for the matured floating-rate term deposit. The operation effective interest rate is equal to the term’s average daily effective rate.

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