The reason is that the aggregate and per-counterparty caps were sufficiently high that market participants were confident that they would not bind, and also because we conducted the term operations without any interest rate premium relative to the overnight operations. At prior quarter-ends, term RRPs were typically offered with maximum bid rates a few basis points above the ON RRP rate. The year-end experience suggests that market participants generally prefer overnight RRPs to term RRPs if they offer the same rate, and that, if desired, adequate control over money market rates can be attained without term RRPs, as long as there is adequate ON RRP capacity. Finally, I’ll offer a few observations on a daily repo operation I haven’t yet mentioned. As a long-standing service to foreign central banks, foreign governments, and international official institutions, the New York Fed runs an overnight investment facility known as the foreign repo pool.45 In this operation, at the end of each business day, account holders’ cash balances are invested in an overnight reverse repo secured by the Federal Reserve’s securities holdings.46 The foreign pool is an autonomous factor affecting reserves and, as a result, in the pre-crisis operating framework, the Desk would have to essentially sterilize variations in the pool's size with repo operations.
42  A small number of financial market commentators had opined that use of the tri-party repo infrastructure for the ON RRP facility would make it harder for market participants to borrow the Federal Reserve’s Treasuries in securities lending to facilitate settlement, and therefore result in less liquid Treasury markets. However, use of the Federal Reserve’s securities lending program has been stable since liftoff, suggesting that the design of the ON RRP facility has thus far not contributed to any increase in the scarcity of specific Treasury collateral. 43  If the total amount of propositions received is less than or equal to the amount of available securities, awards are made at the specified offering rate to all counterparties that submit propositions. In the event that the value of propositions received exceeds the ON RRP’s capacity, awards are made at the rate at which the capacity was achieved (the stop-out rate), with all propositions below this rate awarded in full and all propositions equal to this rate awarded on a pro rata basis. The stop-out rate, which can be any value at or below the specified offering rate (including a negative rate), is determined by evaluating all propositions in ascending order by submitted rate up to the point at which the total quantity of propositions equals the overall size limit. The ON RRP FAQs provide more information on the auction mechanism.