The Federal Reserve Bank of New York named RBC Capital Markets the second new primary dealer in 2009, as reported in an RBC release. The designation will be effective today.
RBC Capital Markets, a unit of Toronto-based Royal Bank of Canada, is based in New York.
RBC’s U.S. Government bond trading business is headed by Managing Director Thomas Tucci, while Darren Lowe is RBC’s head of rates and MBS sales.
Jefferies & Co. was added on June 17 as the first new dealer since 2006, when Cantor Fitzgerald joined the network. This is the first time that the Fed has added more than one firm in a calendar year since 1988, when three firms joined, according to published reports.
Primary dealers serve as counterparties in open market operations, the central bank’s mechanism for maintaining its target rate for overnight loans between banks. They are also expected to bid when the Treasury sells bills, notes and bonds.
RBC Capital increases the ranks of U.S. dealers to 17 firms. This year, the network shrank to 16 firms, the lowest since it was formalized in 1960.
The Treasury is expected to sell $1.1 trillion of debt in the second half of this year, more than the 2008 total, as the deficit approaches $1 trillion, Barclays, another primary dealer, said in published reports.