Yesterday, on March 17, 2020, the Board of Governors of the Federal Reserve System (“FRB”) announced the creation of a Primary Dealer Credit Facility (“PDCF”) to provide a liquidity backstop to primary dealers of the Federal Reserve Bank of New York (“FRBNY”), which include the nation’s largest broker-dealers.  The PDCF will provide short-term loans to primary dealers in an effort to smooth market functioning and facilitate the availability of credit to businesses and households in light of the economic conditions caused by the COVID-19 pandemic.  The PDCF will function as a fully secured loan facility for primary dealers, similar to the Federal Reserve’s discount window for depository institutions.

Click here to read Covington’s client alert summarizing these developments.