The New York Fed is to stop using external investment managers for MBS purchases and will start using internal staff from the end of the month. Four external managers were originally mandated by the Fed for the role, which was subsequently streamlined in August to two - Wellington Management Company for trading, settlement and as a secondary provider of risk and analytics support, and BlackRock as the primary provider of risk and analytics support.

The Fed notes that the agency MBS programme has matured since it began in January, and it has had time to further develop its internal analytical and operational expertise in this area. The change in the number of external investment managers was not performance-related, it notes.

From an operational perspective, the Fed's trading approach will replicate the one currently employed by the programme's trading investment manager, Wellington - although the New York Fed will be trading in its own name. From a settlement perspective, the Fed will continue to leverage the middle office settlement support of Wellington for any trades executed by Fed staff.