Term Securities Lending Facility
Encyclopedia
The Term Securities Lending Facility (TSLF) is a 28-day facility managed by the United States
Federal Reserve that offers Treasury general collateral (GC) to the primary dealers in exchange for other program-eligible collateral. It is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally.
This is different from SOMA Securities Lending program which offers specific Treasury securities held by SOMA for loan against Treasury GC on an overnight basis. Dealers bid competitively in a multiple-price auction held every day at noon. The TSLF offers Treasury GC held by SOMA for a 28-day term. Dealers bid competitively in single-price auctions held weekly and borrowers will pledge program-eligible collateral.
The collateral for the Term Securities Lending Facility (TSLF) also has been expanded; eligible collateral will now include all investment-grade debt securities. Previously, only Treasury securities, agency securities, and AAA-rated mortgage-backed and asset-backed securities could be pledged.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
Federal Reserve that offers Treasury general collateral (GC) to the primary dealers in exchange for other program-eligible collateral. It is intended to promote liquidity in the financing markets for Treasury and other collateral and thus to foster the functioning of financial markets more generally.
This is different from SOMA Securities Lending program which offers specific Treasury securities held by SOMA for loan against Treasury GC on an overnight basis. Dealers bid competitively in a multiple-price auction held every day at noon. The TSLF offers Treasury GC held by SOMA for a 28-day term. Dealers bid competitively in single-price auctions held weekly and borrowers will pledge program-eligible collateral.
History
TSLF was announced on 11 March 2008. In 2008, as liquidity in the global markets came to a halt, the FED took action to allow the TSLF to expand the types of acceptable collateral: student loans, car loans, home equity loans and credit card debt, as long as it was highly rated . Ironically, many of the establishment rating firms were themselves shown to be of little worth in the preceding few years, and the ratings system was in the state of being reworked.The collateral for the Term Securities Lending Facility (TSLF) also has been expanded; eligible collateral will now include all investment-grade debt securities. Previously, only Treasury securities, agency securities, and AAA-rated mortgage-backed and asset-backed securities could be pledged.