Primary Dealers
Designated financial institutions authorized to trade directly with the Federal Reserve Bank of New York in government securities, numbering 24 as of 2025.
What is Primary Dealers?
Primary dealers, including firms like J.P. Morgan Chase and Goldman Sachs, must bid competitively in Treasury auctions, maintaining a 1% share of activity, and provide market intelligence to the Fed. Selected based on criteria like $1 billion in net capital and active repo market participation, they facilitate over $15 trillion in annual Treasury issuance. In 2024, they handled $3.5 trillion in Fed repo operations.
They act as counterparties in open market operations, buying securities from the Fed during QE (e.g., absorbing $80 billion monthly in 2021) and selling during QT. Dealers also make two-sided markets in Treasuries, quoting bid-ask spreads as low as 1/32 of a point for on-the-run bonds. During the March 2020 liquidity crunch, the Fed provided $1 trillion in lending to dealers via the Primary Dealer Credit Facility.
The list is updated periodically; in 2025, BNP Paribas Securities Corp. remains a dealer, with weekly statistics showing $200 billion average daily trading volume.
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