Why was minimum capital threshold to become a primary dealer increased from $50 to $150 million?
This change reflects the proportional increases in gross U.S. Treasury debt issuance and the size of the U.S. Treasury market, as well as the evolution of open market operations since the policy was last updated in 1992. The New York Fed believes a minimum net capital requirement is a prudent element of its counterparty credit risk management. In light of the significant business expectations of primary dealers and the meaningful securities positions that primary dealers may take as a consequence, the New York Fed retains flexibility to require higher capital where circumstances warrant (e.g., if a dealer has a riskier business model or does not have significant support from a parent or affiliate).
